September 30, 2021 – Real Estate Market Numbers

By Glen Bell   (510) 333-4460

We’re beginning to see a change in the market place. So, I’d like to start by quoting an article posted by Realtor.com on September 30, 2021;

“After a wild year of unprecedented price increases, a worsening shortage of homes for sale, and cutthroat bidding wars where offers six figures over the ask price weren’t uncommon, conditions are finally normalizing. More homes are expected to go up for sale this season just as many would-be buyers are either priced out or so fed up after losing out on home after home that they’re dropping out of the running.”

“With more folks sidelined, some of the steam has been let out of the market. Prices aren’t rising by as much as competition is down and homes are taking a little longer to sell, giving buyers some breathing room.”

“It’s not like the market is soft,” says Lawrence Yun, chief economist of the National Association of Realtors. “It’s just moving away from that extreme frenzy.”

My current statistics are supporting these comments. We’re still seeing a strong sellers’ market. Just not as crazy as what we were seeing February through May. We’ve seen a 48% increase in our inventory since the end of May and yet a 9.2% drop in pending sales.

The pending/active ratio has been a benchmark that we’ve used as a measure of supply and demand to determine whether we’re in a buyer’s or a seller’s market. Typically, a number well above 1, (more inventory, or supply, with fewer pending sales, or demand) favors sellers. A number below 1 favors buyers. I rarely see this ratio go over 2 and yet it’s remained above 2 February through May, (during the height of our crazy, competitive and frenzied market this year). The pending/active ratio is currently at 1.34 still indicating a strong “sellers’ market. However, this ratio has been steadily coming down from its’ high in March of 2.47.

“Things are settling down. There will still be some multiple offers, but it will be less tense,” says Lawrence Yun, chief economist of the National Association of Realtors®. He expects the days of homes receiving 20 to 30 offers are becoming a thing of the past. “And some homes are lingering on the market for a week or two without an offer.”

The average days on market are now up to 40 days for the East Bay listings, up considerably from its’ low in April of 16 days on market. The per centage of homes “sitting” for 30 days or longer is now 32%, up from it’s low in April of 17%. The bottom line is that homes are taking longer to sell and more are sitting.

Asked “Will home prices fall?

The question on the minds of sellers, buyers, homeowners, and just about everyone else is whether prices might actually fall. Sorry, buyers, that likely won’t happen anytime soon.

“You’ve still got a lot of young people who have still not bought a home but who would like to,” says Realtor.com Chief Economist Danielle Hale. “Anytime the market starts to cool, you’ve got people on the sidelines waiting for their chance to get in. That keeps both home sales and home prices from declining too much.”

She expects more homes to hit the market in October and through the end of the year. But it won’t be enough to ameliorate the problem of demand.

Here are some highlights for the 39 East Bay Cities that I track:

• The month’s supply for the combined 39 city area is 24 days. Historically, a 2 to 3 months’ supply is considered normal in the San Francisco East Bay Area. As you can see from the graph above, this is normally a repetitive pattern over the past four years.

• Our inventory for the East Bay (the 39 cities tracked) is now at 2,156 homes actively for sale. This is roughly what we saw last year at this time, of 2,129. We’re used to seeing between 3,000 and 6,000 homes in a “normal” market in the San Francisco East Bay Area. Pending sales decreased to 2,894, lower than what we saw last year at this time of 3,205.

• Our Pending/Active Ratio is 1.34. This is down from our high of April of 2.47. Last year at this time it was 1.51

• Sales over the last 3 months, on average, are 9.8% over the asking price for this area, much higher than what we saw last year at this time, of 3.1%.

We’ve experienced such a big price increase this year, that I had to ask myself by how much. So, to give us an idea, here’s a spreadsheet showing the historical annual median price broken down by city. 2021 shown is year to date, through September 30^th of this year. Keep in mind that these numbers will probably come down some due to seasonal influences where median price typically lowers as we approach the holidays.

Recent News

The Fever Has Broken’: Is the Housing Market Frenzy Really Going To Cool Off This Fall?

By Clare Trapasso, Realtor.com, Sep 30, 2021

Over the next few weeks and months, the long-overheated U.S. housing market is expected to continue to cool off in the bracing chill of autumn.

After a wild year of unprecedented price increases, a worsening shortage of homes for sale, and cutthroat bidding wars where offers six figures over the ask price weren’t uncommon, conditions are finally normalizing. More homes are expected to go up for sale this season just as many would-be buyers are either priced out or so fed up after losing out on home after home that they’re dropping out of the running.

“The fever in the housing market has broken,” says Ali Wolf, chief economist of building consultancy Zonda. “There have been buyers that have just been beat down for the last six months—and after losing so many homes and going through the emotional roller coaster, they’ve decided to stop searching for now. There are more homes on the market than there were six months ago.”

During the COVID-19 pandemic, record-low mortgage interest rates, below 3%, helped many homebuyers to absorb prices that reached all-time highs in the spring and summer. But prices rose so high so quickly that even bargain mortgage rates couldn’t offset them enough to give buyers some needed financial relief.

With more folks sidelined, some of the steam has been let out of the market. Prices aren’t rising by as much as competition is down and homes are taking a little longer to sell, giving buyers some breathing room.

In September, the rate of year-over-year growth was halved, to 8.6%, down from its peak of 17.2% in April, according to Realtor.com® data. This means the median list price of a home grew half as fast as in the spring. Homes also took a bit longer to sell, at about 43 days. While that’s down 11 days from the same month last year and 22 days from 2019, it’s up 6 days from June.

“Things are settling down. There will still be some multiple offers, but it will be less tense,” says Lawrence Yun, chief economist of the National Association of Realtors®. He expects the days of homes receiving 20 to 30 offers are becoming a thing of the past. “And some homes are lingering on the market for a week or two without an offer.”

This fall, buyers may once again be able to include contingencies in their offers, such as requiring home inspections and appraisals, and still win out bidding wars. They may even—gasp—get homes at the list price.

All-cash offers could also dip if buyers don’t need to cash out their savings, stocks, and cryptocurrency stashes to stand out from the competition.

“It’s not like the market is soft,” says Yun. “It’s just moving away from that extreme frenzy.”

The changes in the housing market may be coinciding with the seasonal slowdown. Typically, competition is fierce in the summer as families battle over larger homes in the suburbs, hoping to secure residences and settle in before the kids start school. Then the market slows down with less competition for the smaller homes that traditionally go up for sale.

Yun expects annual price increases will slow to a more normal level, around 5%, versus the double-digit price hikes that reigned earlier in the year. But this may not be true for every home in every part of the country.

“If you want a reasonably priced home in a desirable area, be ready to still face stiff competition,” says Zonda’s Wolf.

Will home prices fall?

The question on the minds of sellers, buyers, homeowners, and just about everyone else is whether prices might actually fall. Sorry, buyers, that likely won’t happen anytime soon.

The nation is still suffering from a severe housing shortage resulting in more buyers than there are abodes for sale. This is a continuing hangover from the Great Recession’s aftermath, when builders largely held off on building while investors bought up single-family homes and turned them into rentals. Meanwhile, the millennial generation is larger than the previous one, meaning there are more prospective buyers than there were a decade or so ago.

There’s plenty of pent-up demand for homes.

“You’ve still got a lot of young people who have still not bought a home but who would like to,” says Realtor.com Chief Economist Danielle Hale. “Anytime the market starts to cool, you’ve got people on the sidelines waiting for their chance to get in. That keeps both home sales and home prices from declining too much.”

She expects more homes to hit the market in October and through the end of the year. But it won’t be enough to ameliorate the problem of demand.

The nation is still short about 5 million homes, Hale says. As builders can’t get them up fast enough, she expects it will take between five and six years before there are enough homes for sale to meet demand.

New construction is beginning to pick up after months of builders contending with shortages in lumber, labor, materials, and appliances. While there are still delays compared with before the pandemic, there was about a 5% uptick in construction in August compared with July, says Zonda’s Wolf.

“Inventory is still very, very tight,” says Wolf. But “we’re up from the bottom. We expect to see a little more inventory trickle onto the market through the end of this year and into next year.”

Rising mortgage rates will likely keep high prices under control

Rising mortgage interest rates are expected to keep price growth in check: After all, buyers can afford to fork over only so much for their monthly housing payments. So if rates rise, buyers won’t be able to afford more expensive properties.

This could result in lower price growth, or prices going flat or even dipping a little in certain markets.

“Once mortgage rates push up a little bit, it’s going to combine with higher home prices to price people out of the market,” says Mark Zandi, chief economist of Moody’s Analytics. “Some markets could see prices go down a little, like in the most juiced markets. … [But] it’s not a crash.”

Rates are expected to top 3% by the end of the year and reach 4% by the end of 2022, says Joel Kan, an economist at the Mortgage Bankers Association. They averaged 2.88% for a 30-year fixed-rate loan in the week ending Sept. 23, according to the most recent Freddie Mac data.

Historically speaking, even 4% is still low. Over the past 20 years, mortgage rates averaged about 5%, according to MBA. The difference between a 3% and a 4% rate on a $380,000 home (the median list price nationally) was about $169 a month on a 30-year fixed-rate loan. That adds up to nearly $61,000 over the life of the loan.

“We’re expecting rates to increase moderately over the next 12 months,” says Kan. “As the economy improves, as the job market improves, typically that pushes rates higher. [But] there is a little bit more uncertainty now, given that we’ve seen the pandemic linger longer than we expected.”

How will the fall market affect home sellers?

While experts predict the housing market will remain firmly in the seller’s court, the days of picking prices out of thin air are likely coming to an end. The same goes for not making any improvements to a property (let alone having it properly cleaned) before listing it.

“Some sellers got a little too greedy or had a misconception about the market conditions,” says NAR’s Yun.

Zonda’s Wolf recommends sellers look at comps of other homes in their neighborhoods that have recently sold to get a realistic idea of what they can charge for their properties. They should also get their homes in tiptop shape. And while they may not get 20 offers like their neighbors may have received a few months ago, well-priced, move-in ready homes are in high demand.

“If you’re a seller today, you’ll likely still get top dollar, but you’re still going to have to put in the work,” adds Wolf. “Dust for cobwebs, stage the home, put on a fresh coat of paint.”

Where home prices are going next, according to forecast models

BY LANCE LAMBERT, Fortune, September 21, 2021

The COVID-19 housing market—underpinned by remote work, pandemic-induced low mortgage rates, and a demographic wave of first-time homebuyers—has been among the hottest in the nation’s history. Since the onset of the crisis, median home list prices are up 23%.

Recently, some of that exuberance has finally left the market. Indeed, since bottoming out this spring, housing inventory is up 30% as some homebuyers start to balk at record prices, and more sellers—who fear losing out on big gains—are listing. While the market is clearly still a seller’s market, it has inched a bit in buyers’ favor in recent months.

But what does softening in the housing market mean for home price growth?

The consensus among the industry’s forecast models is that we’re headed for slower growth, albeit still positive. The weakest projection comes from real estate research firm CoreLogic, which is forecasting just a 2.7% appreciation in the coming 12 months. Meanwhile, John Burns Real Estate Consulting and Freddie Mac—which do calendar year forecasts—project home price growth of 4% and 5.3%, respectively, in 2022.

“Annual home price growth was the most that we have ever seen in the 45-year history of the CoreLogic Home Price Index. This price gain has far exceeded income growth and eroded affordability, wrote Frank Nothaft, chief economist for CoreLogic, in his latest market outlook report. “In the coming months this will temper demand and lead to a slowing in price growth.”

Already, we’re starting to see this slowing appreciation materialize in the market. Between April 2020 and April 2021, median home prices on Realtor.com skyrocketed 17.2%. But over the most recent 12-month period, that rate was just 8.6% year over year. While this represents numerical “softening,” it’s easy to imagine how it might not feel like it to the typical homebuyer. After all, 8.6% is still well above most Americans’ annual pay bump.

How can home prices keep rising after posting such large gains? It all comes down to supply and demand. As Fortune has previously reported, we’re in the middle of the five-year period during which the largest chunk of millennials, those born between 1989 and 1993, are hitting their thirties—the age when first-time homebuying really kicks into gear. Meanwhile, housing supply is simply outmatched: Reeling from the 2008 housing bust, homebuilders spent the past decade playing it safe rather than aggressively building what this demographic wave would need. As a result, the U.S. is now under-built by around 4 million homes, according to a recent analysis by Freddie Mac.

But strong fundamentals don’t mean the market is free of risk.

The biggest wild card is Federal Reserve Chair Jerome Powell. If inflation-concerned central bankers raise interest rates sooner than expected, it would translate into downward pressure on real estate prices.

The second unknown is tied to the end of federal pandemic protections. At the end of September, the mortgage forbearance program—which currently protects 1.5 million homeowners—will begin to wind down. Some of those struggling borrowers could opt to sell their home. The latest forecast by Zillow estimates 25% of those forbearance mortgage holders will list their home. While that would certainly increase housing inventory, it wouldn’t fundamentally change the current market. However, Zillow researchers write if they’re wrong, and it’s actually 50% of forbearance borrowers who list their homes, then the market would see “a significant deterioration from current conditions.”

Zillow Market Pulse:

By Matthew Speakman on Sep. 17, 2021

The housing market remains very competitive but slowing home value appreciation indicates that the frenzy from earlier in the year is quieting down. An increase in for-sale inventory reinforces this narrative and looks to be increasing home shopper confidence. Interest rates remain low, but trended firmly upward toward the end of the week in anticipation of a Fed announcement.

Home value growth cools even as annual appreciation sets new records

• The national Zillow Home Value Index (ZHVI) increased by 17.7% in August from a year ago.
• Monthly ZHVI appreciation cooled 0.22 percentage points from July to 1.75%.

Inventory levels grow for a fourth straight month, coinciding with an uptick in home purchase applications

• More than 1.1 million homes were for sale in August, up 4.1% from July.
• Applications for home purchase mortgages increased by 7.6% last week from the week before, according to the Mortgage Bankers Association.

Mortgage rates end the week higher in anticipation of a key Fed announcement

• Mortgage rates now sit at their highest level in about two months.
• Investors believe that the Federal Reserve could announce plans next week to tighten monetary policy.

So what? 

• As the summer nears its end, the housing market remains very warm, but it has gotten distinctly cooler from earlier in the year. Home values continue to grow at a record-fast annual pace: The nation’s typical home value – as measured by the Zillow Home Value Index (ZHVI) – grew 17.7% in August from the same month in 2020, setting a new all-time high annual growth rate for the fourth straight month. The typical home value in the US in August has increased by more than $45,000 from a year ago. But while the annual appreciation continues to set new records, monthly home value growth has begun to soften. National ZHVI increased by 1.75% in August from July, a slower monthly pace than the 1.97% monthly clip registered in July. While monthly ZHVI appreciation in August was the third strongest month-over-month reading in Zillow data history, the one-month deceleration from July the sharpest since July 2020. Taken together, the figures illustrate that the housing market remains very competitive, but that it is also actively cooling from its white-hot state. Leading indicators of home price growth reinforce this dynamic. Of the for-sale listings that went pending last week, 78% of them did so after being on the market for fewer than 30 days. That’s down from a high of more than 85% earlier in the year, but still more than 25 percentage points higher than the shares in the same weeks in 2018 and 2019.

• The softening home price pressure is due in part to increasing levels of for-sale inventory. After consistently plumbing new lows for almost a year, the number of for-sale homes on the market has risen for four consecutive months. While inventory levels are still down significantly (22.7%) from a year ago, the recent uptick in listings has afforded eager home shoppers more options and appears to have assisted in boosting their confidence. The share of people who believe it is a good time to buy a home – as measured by Fannie Mae – ticked up four percentage points in August from July, the first monthly improvement since March. The measure remains near all-time lows, but the monthly improvement was an encouraging sign for the market. And this increased optimism is also showing signs of materializing into home purchases. The Mortgage Bankers’ Association’s index of home purchase mortgage applications increased by 7.6% last week from the week prior. The measure – a leading indicator of home sales in the coming months – has improved in six of the last eight weeks and now sits at its highest level since April.

• One trend that could threaten this budding momentum in home sales activity are recent increases in mortgage rates. Rates had stayed relatively flat for the last few weeks, but they ended the week by making some sharp upward moves and now sit at their highest level since July. The upward momentum came even as a key reading on inflation showed price growth slowed last month, indicating that sky high inflation may finally be starting to cool (though other measures of inflation suggest that price growth may be accelerating and broadening beyond a few select industries). Inflation is a key factor for mortgage rate movements, as rising prices weaken the value of bonds, causing yields to rise and, usually, mortgage rates to follow suit. Whether or not mortgage rates will continue this upward momentum or revert to recent lows will depend more heavily on a key policy announcement next week from the Federal Reserve. The Fed has hinted they may announce a planned shift toward tighter monetary policy this month, but recent weaker-than-expected reports on the labor market and other key sectors, as well as the ongoing surge in COVID cases across the country, may have weakened their case. For now, mortgage rates remain very low and will likely continue to offer attractive financial conditions for housing market shoppers looking to buy their home.

Glen Bell – (510) 333-4460   jazzlines@sbcglobal.net

The post Glen’s SF East Bay Real Estate Market Update September 30, 2021 appeared first on Glen Bell.

May 31, 2021 – Real Estate Market Numbers

By Glen Bell   (510) 333-4460

We’re seeing a very strong sellers’ market right now. It’s primarily due to our current supply and demand. Low rates and the foreseeable improvements in our economy are both driving factors. Inventory at the end of May, was the lowest that I’ve seen it for a May since I have been tracking statistics in the SF East Bay going back to 2007. Our inventory last year at the end of May was low and this year it’s 36% lower in the East Bay. Demand is still there as there are still a good number of homes going into contract. There just aren’t enough homes available for the number of buyers who are looking. This has triggered more competition driving prices up. That’s what you are now seeing with any of the online searches. This could change for a number of reasons, but what I’m hearing is that there won’t be much movement with interest rates for the rest of the year. So, I expect a strong sellers’ market to continue with maybe a bit of a slowdown later this year.

Our inventory really didn’t change much from last month. In fact, it’s remained relatively flat since the beginning of the year. That’s unusual because we normally see a steady increase beginning in January through fall. We have an 18 day supply of homes for sale today. Last year at this time, there was a 39 day supply. I suspect that although homes are coming onto the market to a greater degree, most are getting snapped up quickly. Pendings did increase slightly. However, compared to last year at this time, it’s up a whopping 37%.

The pending/active ratio has been a benchmark that we’ve used as a measure of supply and demand to determine whether we’re in a buyer’s or a seller’s market. Typically, a number well above 1, (more inventory, or supply with fewer pendings, or demand) favors sellers. A number below 1 favors buyers. It’s currently at 2.19 indicating a strong “sellers’ market.” I rarely see this ratio go over 2 and yet it’s remained above 2 since February. For those who remember, this market resembles the one following when sales started cranking up after their big declines during the REO years beginning in 2008. Last year at the end of May, this ratio was at 1.02, (what we would consider a balanced and fairly normal market).

For those agents working with buyers who have been looking, this has been a challenge. Prices have been increasing in most areas due to fierce competition. In fact, looking at the entire East Bay Area, the average sales price % over the average asking price is now at 11%. I checked and couldn’t find anything this high since I began tracking this statistic. Last year at this time, we were at 3.1%.

Markets have traditionally been seasonal, but that’s become less of a factor due to Covid19 influences. With more people working at home and schools having been closed, we’re starting to see a migration from the San Francisco/South Peninsula areas to our own East Bay, or the Central Valley, and even out of state. Buyers want something more affordable and with some distance from their neighbors, possibly having a yard. That’s one reason why the condo market has become soft and that there’s a movement to houses in the East Bay.

Here are some highlights for the 39 East Bay Cities that I track:

• The month’s supply for the combined 39 city area is 18 days. Historically, a 2 to 3 months’ supply is considered normal in the San Francisco East Bay Area. As you can see from the graph above, this is normally a repetitive pattern over the past four years. Supply is less when compared to last year at this time, of 39 days.

• Our inventory for the East Bay (the 39 cities tracked) is now at 1,454 homes actively for sale. This is fewer than what we saw last year at this time, of 2,275. We’re used to seeing between 3,000 and 6,000 homes in a “normal” market in the San Francisco East Bay Area. Pending sales increased slightly to 3,186, much higher than what we saw last year at this time of 2327.

• Our Pending/Active Ratio is 2.19. Last year at this time it was 1.02.
• Sales over the last 3 months, on average, are 11% over the asking price for this area, much higher than what we saw last year at this time, of 3.1%.

Recent News

C.A.R. Housing Market Forecast as of April/27/2021

County Market Overview

CAR Market Minute – June 7, 2021

While the outlook for the economy and the market remains bright, both are encountering supply constraints as the reopening continues. Despite a surge in consumer spending and an improving job market, labor and material shortages have become hurdles that the recovery needs to overcome. As such, inflation and slower job growth remain topics of concern when discussing how fast the U.S. can get back to its pre-pandemic levels. Meanwhile, the housing market has had solid performance since the second half of 2020 but is showing signs of moderations in recent weeks. As tight supply continues to apply upward pressure on prices, the market momentum could slow as affordability issues kick in in the second half of the year.

REALTORS® See Some Market Moderations in the Week Ahead: While almost half (48.6%) of those who responded to the weekly survey expected home sales to rise in the coming week, the share has been below 50% for the fourth time in the past five weeks. Meanwhile, more REALTORS® believed that home prices might have already peaked as those who expected prices to go up declined to 58.2%, the lowest level since late January. The consistent moderations since late April suggest that the market momentum could be easing slightly going into the summer season.

Job Growth Improves but Lower than Expected: U.S. employers added 599,000 jobs last month, an increase from a revised 278,000 in April, but the gains were lower than expected. Businesses continue to struggle to fill job openings as potential workers remain on the sidelines. Factors that constrain the labor supply includes workers’ fear to go back to their jobs because of concerns about catching COVID, the disincentive effect of additional unemployment benefits, and childcare constraints as schools have not fully returned to in-person learning. With payrolls still 7.6M below the pre-pandemic level, a full recovery may not be reached until early 2023. The unemployment rate fell to 5.8% in May from 6.1% the prior month.

Rates Inch Up but Remain below 3%: The average 30-year fixed-rate mortgage (FRM) increased slightly in the first week of June but remained below the 3% threshold. Despite market concerns about rising inflation in recent weeks as the economy continues to recover, the average 30-year FRM compiled by Freddie Mac has been at or below 3% for the past seven weeks. The lower-than expected job growth figure released last Friday may have eased some of the market concerns, as the 10-year Treasury has been primarily moving side-ways since then.

Consumers Feel More Pessimistic about Homebuying: As housing affordability deteriorated further and supply shortage remained an issue, homebuyers sentiment declined to the lowest point in 32 months, according to the C.A.R. Housing Sentiment Survey. Only 19% of consumers believe it is a good time to buy a home in May 2021, a sharp drop from 25% in the prior month, and a steep decline from 31% in May 2020. With California setting another record median price in April 2021 and the corresponding mortgage payment increasing more than 30% from a year ago, potential homebuyers are feeling more pessimistic about the homebuying conditions.  Meanwhile, 72% of all respondents believe it is a good time to sell, an all-time high since the survey launched in September 2018.

Home Building at Fastest Pace in Areas with Shortest Commute Times: Home building expanded the fastest in places with the shortest commute times, according to an index released by the National Association of Home Builders (NAHB). The Q121 Home Building Geography Index (HBGI) shows that single-family home building was the highest in the longest commute (top two quintiles), with a combined market share of 63.6%. The year-over-year growth rate, however, was the strongest at 22.2% in the shortest commutes (bottom quintile). So, while the longer-commute areas have a much greater market share in single-family home building, the construction growth rates were highest in the areas with shortest commute times.

S.F. condo sales hit 16-year high with ‘ferocious’ buyer demand, price discounts

By J.K. Dineen, SF Chronicle, June 7, 2021

San Francisco’s pandemic-battered condo market bounced back with a vengeance this spring, scoring its busiest three-month period in at least 16 years as vaccinated buyers rushed back into the city to take advantage of pricing that is still significantly below its 2018 highs, according to a new report from the brokerage Compass.

The San Francisco condo, tenancy-in-common and co-op market saw more than 1,300 sales in the three-month period between March and May, up from about 400 sales a year ago.

“I’ve been doing this for 30 years and I’ve never seen the ferocious buyer demand that is going on right now,” said Patrick Carlisle, chief market analyst for Compass.

San Francisco’s condo market weakened considerably during the first year of the pandemic as downtown office towers went dark, theaters shuttered and restaurants closed. Apartment buildings in the downtown neighborhoods saw a 25% drop in rents, as many young tech workers took advantage of work-from-home flexibility to return home to their parents or move into more spacious and affordable cities. Now many of those workers are plotting their return, even if their jobs will remain partially remote, Carlisle said.

The spike in interest in condos may have been in part motivated by their value compared to the roaring single-family home market. While single-family homes in San Francisco jumped about 6% year over year, — to a median price of about $1.8 million — condo prices are still off their highs. High-rise condo prices are down 9.1% from pre-pandemic highs, while mid-rise units are down 9.6% and low-rise homes are 5.2% below what they were. The median two-bedroom condo is about $1.3 million, according to Compass.

Throughout the entire Bay Area, the three-month period saw 3,969 sales of homes and condos of $2 million or more, a 103% increase from the same three-month period in 2019, according to Compass. San Francisco luxury condo and house sales — defined as over $2 million — also hit all-time highs in sales, up 50% and 70%, respectively, from previous peaks. In Contra Costa County, luxury home sales were up 220% from their previous high.

With condos still down almost 10% and single-family homes up 6% or more, “you are starting to see a bigger differential between condo and single-family home prices,” said Carlisle. “It’s likely that people are looking at that and deciding they can get more for their money” in a condo building, he said.

Tishman Speyer Senior Managing Director Carl Shannon said trade at the twisty white Jeanne Gang-designed Mira tower in downtown San Francisco is “vastly improved” over a year ago. So far this year, 50 condos have sold in the building, generating more than $75 million in sales, he said. The 391-unit tower is more than 50% sold.

“2021 has been fantastic for us,” he said. “We have seen the rate of absorption and pricing both improve dramatically. People are beginning to come back to San Francisco in a very real way. Every day and every week, the feeling on the streets downtown is better.”

Tishman Speyer recently broke ground on two new buildings at Mission Rock, across from Oracle Park. One of the buildings is pre-leased to Visa; the other will be apartments.

“I think the vaccine rollout is a huge factor in the condo market,” said Carlisle. “People are feeling better about getting into elevators and walking down hallways. Population density is no longer as much of an issue.”

Glen Bell – (510) 333-4460   jazzlines@sbcglobal.net

The post Glen’s SF East Bay Real Estate Market Update May 31, 2021 appeared first on Glen Bell.

March 31, 2021 – Real Estate Market Numbers

By Glen Bell   (510) 333-4460

We’re seeing a very strong sellers’ market right now. It’s primarily due to our current supply and demand. Low rates and the foreseeable improvements in our economy are both driving factors. Inventory at the end of March, was the lowest that I’ve seen it for a March since I have been tracking statistics in the SF East Bay going back to 2007. Our inventory last year was low and this year it’s 20% lower in the East Bay. Demand is still there as there were a good number of homes going into contract. There just aren’t enough homes available for the number of buyers who are looking. This has triggered more competition driving prices up. That’s what you are now seeing with any of the online searches. This could change for a number of reasons, but what I’m hearing is that there won’t be much movement with interest rates for the rest of the year. So, I expect a strong sellers’ market to continue with maybe a bit of a slowdown later this year.

Our inventory really didn’t change much from last month. That’s unusual for March because we normally see a sizable increase. We have an 18 day supply of homes for sale today. Last year at this time, there was a 24 day supply. I suspect that although homes are coming onto the market, most are getting snapped up quickly. Pendings did increase by approximately 17%. Compared to last year at this time, it’s up a whopping 55%.

The pending/active ratio has been a benchmark that we’ve used as a measure of supply and demand to determine whether we’re in a buyer’s or a seller’s market. Typically, a number well above 1, (more inventory, or supply with fewer pendings, or demand) favors sellers. A number below 1 favors buyers. It’s reached 2.47 indicating a strong “sellers’ market.” This is the highest I’ve seen it since March of 2013. For those who remember, that was when sales started cranking up again from their big declines during the REO years beginning in 2008. Last year at the end of March, we were at 1.28.

For those agents working with buyers who have been looking, this has been a challenge. Prices have been increasing in most areas due to fierce competition. In fact, looking at the entire East Bay Area, the average sales price % over the average asking price is now at 7.3%. I checked and couldn’t find anything over 7% since I’ve been tracking this statistic. Last year at this time, we were at 2.6%.

Markets have traditionally been seasonal, but that’s become less of a factor due to Covid19 influences. With more people working at home and schools having been closed, we’re starting to see a migration from the San Francisco/South Peninsula areas to our own East Bay, or the Central Valley, and even out of state. Buyers want something more affordable and with some distance from their neighbors, possibly having a yard. That’s one reason why the condo market has become soft and that there’s a movement to houses in the East Bay.

Here are some highlights for the 39 East Bay Cities that I track:

• The month’s supply for the combined 39 city area is 18 days. Historically, a 2 to 3 months’ supply is considered normal in the San Francisco East Bay Area. As you can see from the graph above, this is normally a repetitive pattern over the past four years. Supply is less when compared to last year at this time, of 24 days.

• Our inventory for the East Bay (the 39 cities tracked) is now at 1,244 homes actively for sale. This is fewer than what we saw last year at this time, of 1,552. We’re used to seeing between 3,000 and 6,000 homes in a “normal” market in the San Francisco East Bay Area. Pending sales increased slightly to 3,073, much higher than what we saw last year at this time of 1,988.

• Our Pending/Active Ratio is 2.47. Last year at this time it was 1.28.
• Sales over the last 3 months, on average, are 7.3% over the asking price for this area, much higher than what we saw last year at this time, of 2.6%.

Recent News

C.A.R. Housing Market Forecast

C.A.R.’s Housing Affordability Index (HAI) measures the percentage of households that can afford to purchase a median-priced, single-family home in California. C.A.R. also reports affordability indices for regions and select counties within the state. The index is considered the most fundamental measure of housing well-being for home buyers in the state.

CAR Market Minute – April 5, 2021

As we enter the traditional home buying season, REALTORS® remain upbeat about the current housing market conditions. There are reasons to feel good about the market, despite rates rising high in recent weeks.  With a strong growth in employment in March and a surge in consumer confidence to the highest level in the year, the economy is slowly recovering and life is hopefully getting back to somewhat “normal” in the second half of the year. Tight supply, however, remains a concern as it continues to hold back demand and continues to put pressure on affordability.

REALTORS® Feel Upbeat about the Market: California REALTORS® felt positive about the market as we entered the month of April.  More than half (54.7%) of them expected sales to improve in the upcoming week, while nearly seven out of ten believed prices to increase from the prior week.  Both measures reached the highest level since C.A.R. started tracking members’ weekly market sentiment in July 2020. Those who had a listing appointment also hit the highest level (40.4%) since late August, and 49 percent think active listings will rise in the upcoming week.

Pending Home Sales Hold back by Tight Supply: U.S. pending home sales dipped slightly by 0.5 percent from a year ago after eight consecutive months of year-over-year gains, according to the National Association of Realtors® (NAR). Tight housing inventory was the primary reason for the slowdown, as there were just 1.03 million homes for sale at the end of February, a 29.5 percent decline compared to a year ago. On a month-to-month basis, pending home sales were down 10.6 percent in February with all regions showing a decline.

Consumer Confidence Hits One-Year High: Consumer confidence in the U.S. surged in March and reached the highest level since the pandemic started a year ago. The index increased to 109.7 in March from 90.4 in February and was the third consecutive month with a gain from the prior month. The higher-than-expected number surpassed even the top-end of most forecasts by a sizable margin. Government fiscal stimulus, lower number of COVID cases, continued success in vaccine roll outs, and the reopening of businesses were all contributing factors to the optimism. While the index remains below a pre-pandemic level posted in February of last year, the increase in optimism is an encouraging sign that we are moving in the right direction.

Job Market Continues to Make Progress: With success in vaccine roll outs improving public health and easing COVID restrictions, economic activities started picking up and firms began ramp up hiring to meet increased consumer demand. Employers added 916k in March as the recovery gained momentum, easily beating consensus expectations. Hiring last month was broad based with almost all major industry reporting gains. Unemployment rate declined 0.2 percentage point to 6.0 percent in March 2021, the lowest since twelve months ago. While the unemployment rate is still above the pre-pandemic level and there is still a lot of ground to recover, the labor market is showing signs of a faster recovery than previously anticipated.

Mortgage Applications Moderate in Recent Weeks but Remain Elevated: With higher rates cooling refinancing activity, mortgage applications decreased 2.2 percent from one week earlier. The Purchase Index decreased 1 percent compared to the prior week but was 39 percent higher than the same week one year ago, as purchase activity dropped sharply due to the pandemic. The refinance share of mortgage activity dipped 3 percent on a week-to-week basis and was 32 percent down from the same week of last year. Refinance activity continued to pull back, as the pool of borrowers who can benefit from a refinance further shrinks with recent rate hikes.

Construction Spending Declines in February but Still Up over the Year: Severe weather have damped construction activity during February, as total construction spending fell 0.8 percent. On a year-over-year basis though, total spending is up 2.3 percent.  Residential spending registered a decline of -0.2% from the prior month but was up a robust 21.1 percent from a year ago. Single-family expenditures inches up 0.1 percent during the month, while multifamily dipped 1.4 percent.

Asking prices of newly listed homes reach all-time high

Buyers becoming discouraged amid high homes prices and bidding wars

HousingWire, April 2, 2021, 1:14 pm By Tim Glaze

Home prices are sky-high, and a recent report from Redfin underlines that point with some staggering data.

Median home-sale prices increased 17% year-over-year to $335,613 – a record high, per data taken from more than 400 metro areas during the four-week period ending March 28, 2021. And asking prices of newly listed homes rose 14% year-over-year to $353,500, another all-time high.

Pending home sales were up 38% from the same period in 2020 — and up 28% from the same period 2019 — but pending sales grew just 0.9% from Redfin’s previous four-week report.

Sales in general are still high, per Redfin Chief Economist Daryl Fairweather — 59% of homes that went under contract in the current four-week period had an accepted offer within the first two weeks on the market — but the recent low numbers suggest some homebuyers have reached their limit on high home prices and bidding wars.

“Add to the mix a dwindling number of homes for sale and rising mortgage rates, and the typical family that is still searching for an affordable house may have missed the boat,” Fairweather said. “First-time homebuyers who were already stretching their budgets will have to make bigger compromises on size and location or resign to renting for another year.”

Active listings fell 42% according to the report, spurring would-be buyers to submit offers that are significantly over asking price and making the market difficult to navigate for first-time homebuyers and other price-conscious buyers. Redfin reported that 47% of homes that went under contract in the current four-week period had an accepted offer within one week of hitting the market – yet another all-time high. And 41% of homes sold for more than their listed home price, which was 16 percentage points higher year-over-year.

Fairweather’s suggestion for those would-be buyers: look at condominiums and other more realistic purchases, build some equity, and wait this out.

“[President Joseph Biden’s] infrastructure plan aims to incentivize zoning for multifamily homes, which could increase the supply of affordable homes and provide even more people a path to homeownership,” Fairweather said. “But, there is no guarantee the incentives would be enough for local governments to change their zoning practices.”

The aforementioned infrastructure plan, dubbed the American Jobs Plan, aims to inject $213 billion into housing with the building of 500,000 homes in low- and middle-income areas. And two million affordable homes and commercial buildings would be built and renovated over the next decade as part of the initiative.

Glen Bell – (510) 333-4460   jazzlines@sbcglobal.net

The post Glen’s SF East Bay Real Estate Market Update March 31, 2021 appeared first on Glen Bell.

January 31, 2021 – Real Estate Market Numbers

By Glen Bell   (510) 333-4460

Here’s a quick summary of what’s going on in the San Francisco East Bay real estate market as of January 31^st, 2021.

I’d like to start out with a quick quote coming from CAR chief economist Jordan Levine:

“Home prices, which usually peak during the summer, were unseasonably strong in December,” he said in a news release accompanying the report. “The imbalance between supply and demand continues to fuel home price gains as would-be home sellers remain reluctant to list their homes during the pandemic.”

“Home sales should remain elevated into the first half of 2021, as motivated buyers take advantage of the increased purchasing power,” he said.

Yes, sales were up in December but down slightly in January. Pendings are down by 5% from December but up by 34.7% compared to last year. Inventory on the other hand has increased by 20% from last month. However, still below last year’s levels by 14%. This is the lowest inventory level for a January that I’ve seen since I began tracking statistics in 2007. Based on normal seasonal influences, we typically see a steady increase from the beginning of the year through to the end of September followed by a decrease coming into the holidays. We have an 18 day supply of homes for sale today. Last year at this time, there was a 21 day supply.

Our supply and demand ratio is now at 1.87 indicating a strong “sellers’ market.” Last year at the end of January, we were at 1.20. The year before that, .78.

We’re seeing a migration coming out of SF and South Peninsula. Some movement to the East Bay, some to the Central Valley and some even out of the state altogether. This is primarily due to being able to work at home, high cost of living, state & local taxes, smoke, traffic, housing affordability, job relocations, etc

We’re also seeing a softening in some of those markets plus rents have been coming down. The Condo market continues to be sluggish.

Here are some highlights for the 39 East Bay Cities that I track:

• The month’s supply for the combined 39 city area is 18 days. Historically, a 2 to 3 months’ supply is considered normal in the San Francisco East Bay Area. As you can see from the graph above, this is normally a repetitive pattern over the past four years. Supply is less when compared to last year at this time, of 21 days.

• Our inventory for the East Bay (the 39 cities tracked) is now at 1,161 homes actively for sale. This is fewer than what we saw last year at this time, of 1,348. We’re used to seeing between 3,000 and 6,000 homes in a “normal” market in the San Francisco East Bay Area. Pending sales decreased slightly to 2,172, much higher than what we saw last year at this time of 1,613.

• Our Pending/Active Ratio is 1.87. Last year at this time it was 1.20.
• Sales over the last 3 months, on average, are 4.8% over the asking price for this area, Higher than what we saw last year at this time, of 1.6%.

Recent News

California Association of Realtors Market Minute

February 8, 2021

Housing demand is stronger than normal so far in 2021, while tight supply continues to put upward pressure on housing values. Robust price growth will not ease up until some balance between supply and demand is restored. Recent survey results suggest that the housing market could be getting more listings in the coming weeks, possibly because of the improving pandemic situation and a recovering economy.

Signs of Improvement on the Supply Side:  While the number of active listings remained near the lowest level since the pandemic began, the rate of decline appeared to be leveling off. Last week’s average daily new listings, in fact, had its first weekly increase in three weeks based on the weekly MLS data. Survey results also suggest a bounce back in supply as 46.5 percent of those who responded to the survey – the highest level in five weeks – believed listings would go up in the following week. Over a third (35 percent) had a listing appointment last week, which was the highest level since early November 2020. Sellers also became more positive about the market as only 6.4 percent of them removed their home from the market, significantly below the 24.1 percent recorded in early June, and was the lowest level since then.

Home Prices Not Expected to Ease: Despite a possible improvement on the supply side of the market, upward pressure on prices continued to build up. All parties involved – buyers, sellers, and agents – agreed that home prices will likely remain on their upward trend in the short term. Three of five REALTORS® (61.3%) who responded to the weekly survey believed that prices would go up in the upcoming week, nearly doubled the level observed in late July and was the highest level in at least the last six months. The share of buyers who expected lower prices also has dropped by more than half from 66.7 percent in early June 2020 to 32.7 percent in the latest week. Meanwhile, the share of sellers who reduced price to attract buyers dipped to the lowest level of 6.8 percent in the last seven months.

Overall Homeownership Rate Rose but Black Homeownership Fell: U.S. homeownership rose in the last quarter of 2020, increasing to 65.8 percent from 65.1 percent in the same period a year earlier. The homeownership rate for white Americans in the fourth quarter of 2020 reached a nine-year high of 74.5 percent, and Hispanic American homeownership rate rose to the highest fourth quarter rate in three years at 49.1 percent. Homeownership rate for Black Americans, however, fell to 44.1 percent, the lowest rate since the first quarter of 2020. So, while the overall homeownership rate might have improved due to favorable lending environment, the economic recession is having a more negative effect on Black American homeownership than other ethnic groups.

Interest Rates Flat and below Recent High: Mortgage rates were unchanged in the past week and remained near record lows, after increasing briefly for a couple weeks in January. The short spike in rates was due to concerns that higher likelihood of passing new fiscal stimulus could spark inflation sooner than anticipated. Those concerns have subsided in recent weeks and rates have moderated since then. While rates could fluctuate as more economic data become available throughout the year, the average 30 year fixed-rate average will likely stay close to 3 percent in 2021.

Unemployment Rate Declined for Mixed Reasons, but Better Days Ahead: The labor market recovery continued with the unemployment rate dropping 0.4 percentage points to 6.3 percent in January. Despite the unemployment falling to the lowest level since March 2020, the labor market condition is less upbeat than suggested by the indicator. First, the increase of 49k jobs in January only partially reversed the job loss of 227k reported by employers in December. In addition, the sharp decline in the unemployment came as the labor force participation rate edged lower to 61.4 percent and 406,000 workers left the labor force.  The employment conditions, nevertheless, look brighter in the days ahead as vaccine rollouts are expected to improve, while additional fiscal stimulus in the work should help strengthen hiring conditions.

How The Condo Market Stalled in 2020, Even as Single-Family Homes Soared

By Nicole Bachaud, Zillow, February 8, 2021

• As the market heated up for single-family homes in 2020, the condo market cooled, with rising inventory and a higher share of listings with price cuts.
• Median sales price for condos rose year-over-year, but fell behind single-family homes.
• Condos may provide an attractive entry point for those looking to own, especially in heated markets.

Housing market performance in urban and suburban areas was broadly similar in 2020, but the nation’s condo market failed to keep pace with the single-family home segment across a broad range of indicators last year. It could indicate that while our preferences for where to live may not have changed much during the pandemic, the type of homes we prefer may have.

Sales and price growth for condos ended 2020 generally lower than for single-family residences (SFRs) while inventory levels were generally higher, according to a Zillow analysis of listing and price data. Still, it remains to be seen how permanent these shifts will be in the face of sky-high housing demand and the enduring affordability of condos for a large pool of buyers eager to get a foot in the door, unfazed by condos’ cozier space and perhaps attracted by the sometimes amenity-rich condo lifestyle.

There was a considerable year-over-year spike in for-sale condo inventory nationwide compared to single-family inventory starting early summer 2020, a potential sign that condo-owners were vacating their homes and trading up for more space and privacy. Even so, this year-over-year increase in condo inventory happened in the midst of steep overall inventory declines, potentially providing homebuyers with modestly more options in a tight market.

Echoing the national trend, annual growth in condo inventory exceeded growth in SFR inventory in 48 of the nation’s 50 largest metro areas. New Orleans and Charlotte were the only exceptions.

Around the same time as inventory levels were rising, the share of condo listings that had at least one price cut also rose above that of SFR listings — the first time that occurred, since at least early 2019, offering further evidence of a softening condo market.

This trend was also mirrored in many local markets, most notably in several west coast metros. In Seattle, the share of condo listings with a price cut was more than 50% higher than the share of single-family homes by October (21% compared to 13.2%, respectively). The majority of California markets and some on the east coast also mirrored this trend, along with markets including Minneapolis, Nashville and Atlanta — an indication that the softening condo market was not only concentrated in dense coastal areas.

Diverging median sales prices between condos and single-family homes offered another sign of softening. The median list price for condos nationwide ended 2020 slightly higher than SFRs, but growth in median sale price has slowed. Throughout last year, single-family homes fetched a consistently higher median final price than condos, but the gap began widening last fall as year-over-year growth in condo prices flattened while SFR prices kept surging.

These differences in list price and sale price may be partly explained by composition differences between listings and sales counts for these two markets. When broken out by value tier, the largest year-over-year increases in for-sale condo listings were in the highest value tier, even as overall condo inventory began to rise. In other words, there were relatively more higher-value condo listings on the market than less-pricey options, contributing in part to condo’s higher median list price. That could be explained in part by where these condo listings were — in general, listings of condos in typically more expensive urban areas grew more than more-affordable suburbs or rural areas, also contributing to higher list prices.

On the sales side, annual growth in sales among the highest-priced single-family homes exceeded growth in other segments, explaining the recent rapid increase in overall SFR sale prices as relatively more, more-expensive, homes sell. For condos, annual growth rates were broadly similar by the end of the year for all but the lowest-priced segment, where growth lagged behind. But these small differences weren’t enough to bring the overall condo median sale price to single-family levels. It is interesting to note that while growth in overall median sales prices for condos is plateauing, the gap in annual sales growth between the highest valued tier and the rest of the condo market has closed.

Condo communities in different markets are responding differently to the pandemic and a softening market. In some metro areas, including Las Vegas and Houston, condo fees — also known as HOA fees or dues — have risen. In other areas, including Washington, DC, Baltimore and other east coast markets, condo fees are falling. These fees often cover maintenance and other costs associated with condo-specific amenities including pools, gyms and community centers — perks that are generally attractive to many buyers, but which may be closed, limited and/or more expensive to operate during the ongoing pandemic.

Condos provide a unique opportunity for prospective buyers looking for a foot in the door, especially in markets where house prices have risen out of reach or where proximity to urban centers is a priority. Many of the factors that make a condo lifestyle attractive to many, including more-communal living and easy access to desirable amenities including gyms, pools and community spaces, may have lost some of their shine during the pandemic. But in a post-pandemic world, it is likely these amenities will come back in full force and again become an attractive selling point.

What Will Real Estate Look Like In 2021? 3 Homebuying Trends You’ll See This Year

By Blake Morgan, Forbes, February 8, 2021

Chances are, you or someone you know has bought or sold a house in the last 10 months. No matter if you are moving across the street or across the country, it’s all part of a record-setting real estate boom.

The Covid-19 pandemic has affected every industry, but perhaps none as surprisingly as real estate. Triggered by job and financial changes, the push to stay at home and low interest rates, a record number of people have bought homes during the pandemic, even as a recession lingers and unemployment rates remain high. And the trend will continue throughout 2021.

The real estate boom is far from over. Here are three key homebuying trends to look for in 2021.

Record-Setting Pace

Homes aren’t just selling, they’re selling at a record-setting pace. The Covid-fueled real estate boost caused an average of 42% of home listings nationwide to sell in two weeks or less. One survey found that more than half of homebuyers say the pandemic accelerated their homebuying process. In the competitive San Diego market, 55% of homes are off the market in less than weeks, with an average of just 20 days on the market.

The record-setting pace is good news for sellers but makes for a difficult experience for buyers. In many cases, potential buyers are outpriced in the competitive market or

However, the record-setting pace could start to slow slightly during 2021. Houses were flying off the market because of a supply shortage and an increase in demand, largely due to a spring freeze in buying, paired with low interest rates and changing job situations. But as supply and demand start to balance out as the year progresses, look for the competitive seller’s market to slow down, but not by much.

In 2021, Zillow expects 6.9 million existing home sales, which is the most since 2005. The projected 21.9% one-year gain in sales is the largest since the early 1980s. An increasing number of millennials are buying houses, and with Gen Z closing in on prime homebuying age, the market demand should hold steady throughout 2021 and into the future.

Perhaps good news for buyers is that 2021 won’t be such a steady rush. Due to the pandemic, typical homebuying seasons went out the window in 2020, creating a free for all. But as things return to a new type of normal in 2021, look for homebuying seasons to return, with a surge of buyers in the spring and summer months and things cooling down towards winter.

Changed Budgets, Higher Prices

The homebuying surge comes in the middle of financial strain and high unemployment numbers. So although many people are buying homes, they aren’t always stretching their budgets. Research found 63% of homebuyers were forced to lower their budget by an average

of $28,400 due to the pandemic. At the same time, 65% of buyers backed out of buying a home, most often due to budget.

When paired with record-low interest rates, lower budgets can still get buyers more home than they could have bought a year ago. Interest rates are likely to stay low throughout 2021 but will start to increase in the second half of the year. Buyers or people who were thinking of buying within the next few years are now speeding up their timelines to make their money go further.

Lowered budgets are changing what some homebuyers are looking for, leading to growth in less expensive regions. In some cases, buyers with lowered budgets are shopping for homes below their price range in hopes of being able to put in an above-list price offer.

Although individuals are lowering their personal budgets, the markets as a whole are increasing. A rise in demand is actually raising home prices. Nearly one in four buyers who purchased between April and June 2020 paid $500,000 or more, an increase from 14% of buyers in the preceding nine months. Experts predict that home prices will increase 5.7% in 2021 to reach new heights.

Leaving Cities And High-Tax Areas

The move to remote working has pushed people out of cities and led to an increase in homebuying in the suburbs. Suburban areas have seen higher home sales growth than urban areas, and many homebuyers have increased their willingness to commute when they return to work in the office.

In the suburbs, homebuyers are more likely to find traits that are increasingly desirable: larger houses for more time spent at home, dedicated office space and personal outdoor space, as well as proximity to beaches, trails and open space.

The top 10 most competitive real estate markets during the pandemic are Seattle, Omaha, Lexington, Denver, Indianapolis, Portland, Oklahoma City, Sacramento, Oakland and Tulsa. These areas will continue to thrive in 2021, especially in their suburban areas.

Aside from leaving urban centers, many people are leaving high-tax areas. Some of the world’s richest people, including Elon Musk, who recently overtook Jeff Bezos as the richest person in the world, are leaving high-tax areas like California in favor of lower taxes. Musk moved himself and the headquarters of SpaceX from California, the state with the highest income tax, to Texas, a state with no income tax. Joining the ranks include Splunk CEO Doug Merritt, who also moved to Texas, Oracle co-founder Larry Ellison, who relocated to Hawaii and even Tom Brady, who recently bought a Miami mansion.

The effects of the ultra-rich leaving high-tax areas will be felt throughout their cities. Others may follow in their footsteps to take advantage of lower taxes, especially as remote work opens up the potential to work from anywhere, and finances are tight for many people. 

What will real estate look like in 2021? In most cases, a continuation of the incredible growth of 2020. Even during a pandemic and recession, homes will continue to sell at a breakneck pace.

Here’s what home prices look like right now for each Bay Area county

By Susie Neilson, San Francisco Chronicle, January 29, 2021

The coronavirus pandemic and struggling economy couldn’t keep a lid on Bay Area home prices, which hit new records in 2020, according to a new report.

The median price for a single-family home in the Bay Area was $1.06 million in December, a slight decrease from November but a 16.4% increase from December 2019, according to a report from the California Association of Realtors released this month. Sales were up 40.2% in the region from 2019, according to the report.

San Mateo County’s median home price rose from $1.65 million in November to $1.7 million in December, making it the most expensive Bay Area county in which to purchase a home. Previously San Francisco, with a median home price of $1.697 million in November, had been the most expensive. But the city’s median home price had decreased slightly to $1.58 million by December.

San Mateo County had knocked San Francisco out of the top spot in December 2019 as well, the report showed. The median price that month was $1.475 million in San Mateo County and $1.45 million in San Francisco.

The median refers to the middle price for all homes in a set, where half sold for less and half for more.

California’s median home price in December reached a record $717,930, a 16.8% increase from December 2019. Active listings fell 47.1% from 2019, a figure the report attributed to homeowners’ wariness to sell during the pandemic. Coupled with low interest rates on mortgages, the decrease in supply helped drive prices up, according to Realtors association Chief Economist Jordan Levine.

“Home prices, which usually peak during the summer, were unseasonably strong in December,” he said in a news release accompanying the report. “The imbalance between supply and demand continues to fuel home price gains as would-be home sellers remain reluctant to list their homes during the pandemic.”

The 30-year fixed mortgage interest rate dipped to 2.68% in December, down from 3.72% last year, according to the report.

Association President Dave Walsh added that mortgage interest rates should remain low well into this year, keeping the housing market strong.

“Home sales should remain elevated into the first half of 2021, as motivated buyers take advantage of the increased purchasing power,” he said.

Experts optimistic about housing market in 2021

Despite four months of declines in pending home sales, low mortgage rates and federal stimulus should bolster market

By By Tim Glaze, HousingWire, January 29, 2021

U.S. pending home sales dipped to the tune of 0.3% in December following a 2.6% drop in November, according to a report from the National Association of Realtors. It’s the fourth consecutive monthly decline, but many industry observers see big potential for the housing market in the year ahead.

Contract signings rose 21.4% from December 2019, with all regions (Northeast, Midwest, South, West) reaching double-digit year-over-year increases. Realtor.com’s Housing Market Recovery Index showed significant contract growth, specifically in Portland, Las Vegas, Denver, Los Angeles, and Boston.

“Despite some weakness in pending sales in recent months, existing home sales continue to happen at breakneck pace, and December’s pending home sales suggest that the housing market is largely holding onto these gains,” said Danielle Hale, realtor.com chief economist. “Greater participation of sellers and builders in the months ahead will make home sales possible while easing some of the pressure on price growth, which is currently rising at a double-digit percent rate and has been for almost six months.”

The overall drop in pending home sales over the final quarter of 2020 can be contributed to a lack of inventory in the housing market, according to Lawrence Yun, NAR’s chief economist.

“There is a high demand for housing and a great number of would-be buyers, and therefore sales should rise with more new listings,” Yun said. “This elevated demand without a significant boost in supply has caused home prices to increase and we can expect further upward pressure on prices for the foreseeable future.”

Added Ruben Gonzalez, Keller Williams’ chief economist: “It may be several months before substantial progress is made in terms of available supply, and price growth will likely continue to accelerate until conditions improve.”

Home prices soared 9.5% in November compared with 12 months ago, according to CoreLogic‘s Case-Shiller index – the largest increase since May 2014.

But a promising 2021 for homebuyers is on the horizon, Yun said, with low mortgage rates and a fiscal stimulus expected to be passed by the Biden administration, which should bolster the housing market.

“I expect the 30-year fixed mortgage rate to average 3%, with the Federal Reserve refraining from any rate increases this year,” he said. “There will also be slower home price appreciation – likely 6.6% – as increased confidence from homebuilders will ultimately lead to an increase in housing starts.”

With rates remaining low, existing-homes sales are likely to reach 6.49 million in 2021, Yun said. That would be a 15% increase from 5.64 million in 2020.

Pending home sales saw a drop only in the Midwest, which reported a 3.6% drop. The Northeast (3.1%), South (0.1) saw increases in the December Pending Home Sale Index, while the housing market in the West remained unchanged.

Glen Bell – (510) 333-4460   jazzlines@sbcglobal.net

The post Glen’s SF East Bay Real Estate Market Update January 31, 2021 appeared first on Glen Bell.

November 30, 2020 – Real Estate Market Numbers

By Glen Bell   (510) 333-4460

Here’s a quick summary of what’s going on in the San Francisco East Bay real estate market as of September 30^th.

I’d like to start out with a quick quote coming from Zillow and Rismedia:

“More sellers are making their way onto the market, but it’s still not enough to offset a supply shortage as a frenzy of buyers look to take advantage of low interest rates. According to Zillow’s most recent Weekly Market Report, buyer demand is still outpacing new supply.”

Yes, sales are up. Pendings are up by 37.5% compared to last year. Inventory on the other hand is down. It’s been flat over the last 5 months before taking a large 25.4% drop in Novemeber. This is 27.5% lower than what we saw last year in November. Based on normal seasonal influences, we typically see a steady increase from the beginning of the year through to the end of September followed by a decrease coming into the holidays. We have a 24 day supply of homes for sale today. Last year at this time, there was a 30 day supply.

Although there was a big “pause” in the market mid-March through mid-May due to COVID-19 Shelter in Place, we’ve bounced back, picking up where we left off early spring in what now looks like a strong sellers’ market again.

You can see this based on the supply and demand ratio that I keep track of. We’re at 1.98 indicating a “sellers’ market.” Last year at the end of November, we were 1.20. The year before that; .71.

We’re starting to see a migration coming out of SF and South Peninsula. Some movement to the East Bay, some to the Central Valley and some even out of the state altogether. This is primarily due to being able to work at home, high cost of living, state & local taxes, smoke, traffic, housing affordability, job relocations, etc

We’re also seeing a softening in some of those markets plus rents have been coming down.

Here are some highlights for the 39 East Bay Cities that I track:

• The month’s supply for the combined 39 city area is 24 days. Historically, a 2 to 3 months’ supply is considered normal in the San Francisco East Bay Area. As you can see from the graph above, this is normally a repetitive pattern over the past four years. Supply is less when compared to last year at this time, of 30 days.

• Our inventory for the East Bay (the 39 cities tracked) is now at 1,590 homes actively for sale. This is fewer than what we saw last year at this time, of 1,905. We’re used to seeing between 3,000 and 6,000 homes in a “normal” market in the San Francisco East Bay Area. Pending sales decreased to 3,145, much higher than what we saw last year at this time of 2,287.

• Our Pending/Active Ratio is 1.98. Last year at this time it was 1.20.

• Sales over the last 3 months, on average, are 6.2% over the asking price for this area, Higher than what we saw last year at this time, of 2.1%.

2021 housing market forecast: What will fuel home sales?

Next year will be a seller’s market

By Daryl Fairweather, The Housing Wire, December 9, 2020

Even as the pandemic nears its end, its impact on the way we work and live will in many ways be permanent, and Americans will migrate to homes that fit their new lifestyles.

We already saw much of this movement in 2020, as home sales surged over 20% this fall, but many homeowners were nervous about listing during the pandemic and will be ready to sell in droves next year. This will send home sales to highs not seen since before the Great Recession of 2008.

In 2021, migration will continue to set records as more than 30% of homebuyers will look to leave their current metro area. The normalization of remote work means that Americans will continue to move to suburban and rural areas, or decide to move to cities that fit their personal preferences instead of just their careers.

The increase in movement will mean many more Americans will have new neighbors. A large majority of Americans are open-minded about moving to a place where their neighbors don’t share their ethnic or religious background. Small towns could start attracting more residents with high-income tech jobs.

We could see more people moving in next door to neighbors who have different backgrounds or beliefs. I am actually part of this trend—I moved from highly liberal Seattle to a swing county in Wisconsin in the fall of this year.

As more Americans move across the country, they’ll need to lean on technology more than ever to help them buy homes. We saw buyers get familiar with these tools during the pandemic. Views of 3D walkthroughs on Redfin have increased 560% since February.

Video tours, where an agent views a home while the buyer is on a video call, represented less than 1% of all tour requests on Redfin before the pandemic, but at the height of the initial stay-at-home orders in early spring surged to about a third of home tours. Since that initial surge, video tours have held steady through the summer and fall, representing about one in 10 home tours. By the end of spring, 45% of recent homebuyers reported they had made an offer on a home sight-unseen during their home-search process.

Making sight-unseen offers can be a winning strategy for buyers seeking out highly desirable homes in a competitive market, especially if they are moving in from out of town and don’t have time to travel to visit homes. Virtual home tour technology coupled with increasing migration will cause more than half of homebuyers to make offers sight-unseen during their search for a home in 2021.

Throughout the pandemic, buyers have become more confident using the technology available to them, and in 2021, we’ll see more home sales as a result.

People who may not have relied on technology before – like your grandparents, or friends with higher health risks – will explore a video tour and realize that it gives them plenty of information to make their buying decision. And since migration is going to drive much of the housing market in 2021, buyers will feel more willing to move out of the city and into a vacation town if they can virtually walk through the homes on the market in their new location and visualize what their new life will be like.

Overall, 2021 will still be a seller’s market, with homes selling faster and more people buying homes than in 2020, but a growing number of buyers will find themselves in their dream homes in new corners of the country—especially those who partner with savvy agents who leverage technology to help them win.

Housing Market Forecast and Predictions for 2021

By Veronica Bradley, DSNews, December 8, 2020

Shelter-at-home orders and other measures were put in place just before springtime this year, which is usually the best time of year for listing and selling homes. However, 2021 poses to be a much more stable year for real estate, according to Realtor.com.

Low inventory, a higher number of buyers than sellers, and historically low mortgage rates sent housing prices upwards quickly. It also made fall the hot time of year for sellers instead of the warmer months.

But 2021 should send things back to where they once were and continue pushing new trends that were emerging even before the pandemic.

Since mortgage rates of around 3% have become the norm, they don’t feel as exceptional and won’t entice buyers as they have in the recent past.

Realtor.com predicts home sales to come in at 7.0% above 2020, building momentum through the spring and continuing through the end of the year. Economic growth from coronavirus vaccines and more normal consumer spending will fuel this trend.

As for home prices, they’re still going up, but they’re slowing down. 2020 is looking to end 7.6% over 2019. But 2021 should only increase by around 5.7%. This will be aided by many millennials trading up and adding inventory to the market.

Speaking of inventory, 2020 saw half a million fewer homes on the market than the previous year. However, “newly listed homes” should be more numerous by the end of 2021. And we may even see an increase in inventory—a first since 2019.

The big trends to watch out for, however, are an increase in first-time buyers, people wanting at-home offices, and suburban migration.

Millennials make up the largest generation, and on their heels are the Gen-Zers who are entering their home-buying years. The older Millennials, those approaching 40, will be looking to trade up and purchase bigger homes to accommodate growing families. These two generations have been able to save money due to shelter-in-place orders and less going out in general, meaning they’ll have more money for down payments.

Remote work was already a growing trend before the pandemic forced more white-collar workers to stay in their homes. And it looks like many will continue to primarily work away from the office, adding to the appeal of the suburbs. Look for an increase in listings mentioning home office space or even close-to-home remote-working options, like coffee shops.

Since commutes have changed, so has the need to be downtown. More people are comfortable with the idea of commuting further if they have to than before, according to a summer survey.

Sellers will continue to have the upper hand throughout the entire year due to an accelerated buying process—thank you, lower inventory. But all in all, 2021 should feel more normal and predictable than 2020.

2021 Housing Market Forecast and Predictions

2021 National Housing Market Forecast and Predictions: Back to Normal

By Danielle Hale, Chief Economist for Realtor.com, December 2, 2020

To say 2020 was a year of surprises is an extreme understatement. What started off as a bright year for the housing market and the economy was soon derailed by a global pandemic and severe economic recession. As detailed by my colleague, George Ratiu, the economic rebound has been sharp, but is by no means complete and created distinct winners and losers among sectors in the economy. Read more detailed thoughts on the overall economic context and outlook, here. One of the big winners has been the housing market, which saw home sales and prices hit decade-plus highs following decade lows in the span of just a few months. We expect housing’s winning streak to continue in 2021 as seasonal trends normalize and some of the frenzied momentum fades thanks to fresh affordability challenges. Below you’ll find our forecast and housing market predictions on key trends that will shape the year ahead.

Realtor.com 2021 Forecast for Key Housing Indicators

Seasonality and 2020 Context: The Baseline

In 2020, the seasonal pattern for home sales and other metrics was thrown out of whack by the timing of the coronavirus arrival as well as the shelter-at-home orders and other measures that were rolled out to arrest the spread of the virus. These measures were implemented just before what’s normally the best time of year for sellers to list a home for sale, and housing inventory never fully made up the gap as buyers returned in earnest before sellers. This uneven return of buyers and sellers created a housing market frenzy that pushed the number of sales to decade highs while time on market dropped to new lows. This trend persisted well into the fall, a time when normal seasonal trends typically favor home buyers over sellers, thus buyers hoping for the usual break in 2020 were likely disappointed. Understanding this backdrop will be key to evaluating the data as it comes in for 2021 as we expect the housing market to settle into a much more normal pattern than the wild swings we saw in 2020. Year over year trends will need to be understood in the context of the unusual 2020 base year.

Home Sales

After whipsawing in tremendous fashion in early 2020, the housing market more than regained its early-year momentum to finish at new highs for home sales in the fall. For the year, we expect 2020 home sales to register slightly higher (0.9%) than the 2019 total thanks to the strong, if delayed, buying season. Going into 2021, we expect home sales activity to slow from those frenzied levels which represented underlying housing demand as well as make-up buying for a spring season many buyers missed out on plus a sense of urgency brought on by record low mortgage rates. As sub-3 percent mortgage rates start to feel less exceptional, buyers may not react with the same immediacy to take advantage of them, initially, though as rates start to rise in the second half of 2021, buyers may feel the need to hurry purchases along to lock in a low rate. Additionally, as make-up buying from the disruption of spring 2020 fades, home purchases will be propelled by underlying demand in 2021. This demand will come from a healthy share of Millennial and Gen-Z first-time buyers as well as trade-up buyers from the Millennial and older generations.

We expect home sales in 2021 to come in 7.0% above 2020 levels, following a more normal seasonal trend and building momentum through the spring and sustaining the pace in the second half of the year. While home sales are expected to lose some momentum over the last months of 2020, the shallower than normal seasonal slowdown creates a higher base of activity leading into 2021 that is roughly maintained for the first half of the year. As vaccines for the coronavirus become broadly available to the public, and economic growth reflects the resumption of more normal patterns of consumer spending, home sales gain even more in the second half of the year.

Home Prices

With the already limited inventory of homes for sale relative to buyers pushed further out of balance by the pandemic that brought out buyers in mass and kept many sellers pondering their options, home prices skyrocketed surging up more than 10 percent over year-ago levels by the late fall. We expect the momentum of home price growth to slow as more sellers come to market and mortgage rates settle into a sideways pattern and eventually begin to turn higher. The large number of buyers in the market, including many Gen-Zers looking to buy their first-home and Millennials who are both first-time and trade-up buyers will keep upward pressure on home prices, but rising numbers of home sellers will provide a better relief valve for that pressure.

We expect home prices in 2020 to end 7.6% above 2019, after a seeing near record high boost in the summer and early fall, but beginning to decelerate into the holidays. From there, we expect price gains to ease somewhat in 2021 and end 5.7% above 2020 levels, decelerating steadily through the spring and summer, and then gradually reaccelerating toward the end of the year.

Inventory

Although the housing market is healing and by many measures doing better than before the pandemic, inventory remains housing’s long haul symptom. There were an insufficient number of homes for sale going into 2020 in large part due to an estimated shortfall of nearly 4 million newly constructed homes. Much to the surprise of many, the coronavirus and recession did not lead to a distressed seller driven inventory surge as we saw in the previous recession, but further reduced the number of homes available for sale. Starting in fall 2020 the housing market saw more than half a million fewer homes available for sale than the prior year. We expect to see an improvement in the pace of inventory declines starting just before the end of 2020 that will continue into Spring 2021, so that while the number of for-sale homes will be lower than one year ago, the size of those declines will drop. We expect a more normal seasonal pattern to emerge which will contrast with the unusual 2020 base and lead to odd year over year trends, but taken as a whole we expect inventories to improve and, by the end of 2021, we may see inventories finally register an increase for the first-time since 2019.

While total inventories will remain relatively low thanks to strong buyer demand, the number of new homes available for sale and existing home sellers, what we call “newly listed homes,” will be more numerous which will help power the expected increases in home sales.

Key Housing Trends

2021 TRENDS: Millennials & Gen Z

The largest generation in history, millennials will continue to shape the housing market as they become an even larger player. The oldest millennials will turn 40 in 2021 while the younger end of the generation will turn 25. Older millennials will be trade-up buyers with many having owned their first homes long enough to see substantial equity gains, while the larger, younger segment of the generation age into key years for first-time homebuying. At the same time, Gen Z buyers, who are 24 and younger in 2021, will continue their early foray into the housing market.

In early 2020, younger generations, including Millennials and Gen Z, were putting down smaller downpayments and taking on larger debts to take advantage of low mortgage rates despite rising home prices. In fact, only a quarter of respondents to a summer survey reported lowering their monthly mortgage budget or not changing their home search criteria in response to lower mortgage rates. The other three-quarters said low rates would enable them to make a change to their home search, and the most commonly cited change was buying a larger home in a nicer neighborhood.

We expect these trends to persist as rising home prices require larger upfront down payments as well as a bigger ongoing monthly payment due to the end of mortgage rate declines. Early in the pandemic period, there was concern that temporary income losses could prove to be particularly disruptive to younger generations’ plans for homeownership, as these were the groups expected to face income disruptions that might require dipping into savings which would otherwise be used for a down payment. Thus far, these disruptions have not had an effect on overall home sales, and some home shoppers report an ability to save more money for a downpayment as a result of sheltering at home, but we are still not completely through the pandemic-related economic disruption.

2021 TRENDS: Remote Work

As we discussed in early 2020, the ability to work from home is not new. In fact, as long ago as 2018, roughly one-quarter of workers worked at home, up from just 15 percent in 2001. More recently, a scan of real estate listings on realtor.com in early 2020 showed that in the ten metro markets where they are most common, as many as 1-in-5 to 1-in-3 home listings mentioned an “office.” Remote working was already more common among home shoppers than the general working population, with more than one-third of home shoppers reporting that they worked remotely even before the coronavirus. Additionally, remote working has gained an unprecedented prominence in response to stay-at-home orders and continued measures to quell the spread of the coronavirus. Another 37 percent of home shoppers reported working remotely as a result of the coronavirus. While a majority of home shoppers reported a preference for working remotely, three-quarters of workers expect to return to the office at least part-time at some point in the future. However, the ability to work remotely was a factor prompting a majority of respondents to buy a home in 2020. This was the case even when most expected to return to offices sometime in 2020. As remote work extends into 2021 and in some cases employers grant employees the flexibility to continue remote work indefinitely, expect home listings to showcase features that support remote work such as home offices, zoom rooms, high-speed internet connections, quiet yards that facilitate outdoor office work, and proximity to coffee shops and other businesses that offer back-up internet and a break from being at home, which can feel monotonous to some, to become more prevalent

2021 TRENDS: Suburban Migration

With remote work becoming much more common, home shopping in suburban areas had a stronger post-COVID lockdown bounceback than shopping in urban areas, starting in the spring and continuing through the summer. These trends, which have been visible in rental data as well, suggest that city-dwellers—freed from the daily tether of a commute to the office and looking for affordable space to shelter, work, learn, and live—were finding the answer in the suburbs. In fact, a summer survey of home shoppers showed that while a majority of respondents reported no change in their willingness to commute, among those who did report a change, three of every four reported an increased willingness to commute or live further from the office.

Even before the pandemic, homebuyers looking for affordability were finding it in areas outside of urban cores. The pandemic has merely accelerated this previous trend by giving homebuyers additional reasons to move farther from downtown.

Housing Market Perspectives

What will 2021 be like for buyers?

The housing market in 2021 will be much more hospitable for buyers as an increased number of existing sellers and ramp up in new construction restore some bargaining power for buyers, especially in the second half of the year. Still-low mortgage rates help buyers afford home price increases that will be much more manageable than the price increases seen in 2020. With companies continuing to allow workers more flexibility, we see the inner as well as outer suburbs and smaller towns continuing to entice home buyers and builders. Areas that can ramp up affordable housing supply will benefit and see an influx of buyers.

While buyers will be able to visit homes in person, a strong preference for most shopping to buy, they will take advantage of the industry’s acceleration toward technology to check out homes, explore neighborhoods, and research the purchase online, saving time and energy to focus on a more selectively curated list of homes to view in person.

Although the pace will slow from late 2020’s frenzy, fast sales will remain the norm in many parts of the country which will be a challenge felt particularly for first-time buyers learning the ins and outs of making a major decision in a fast-moving environment. Buyers who prepare by honing in on the neighborhood and home characteristics that are must-haves vs. nice-to-haves and lining up financing including a pre-approval will have an edge.

What will 2021 be like for sellers?

Sellers will be in a good position in 2021. Home prices will hit new highs, even though the pace of growth slows. Buyers will remain plentiful and low mortgage rates keep purchasing power healthy, but monthly mortgage costs will rise as mortgage rates steady and home prices continue to rise. Sellers hoping to see further double-digit price gains will likely be disappointed, but those setting reasonable expectations can expect to see a timely sale and will want to focus on their next move.

What To Expect in 2021’s Housing Market: This Is How Much Home Prices Will Rise

By Clare Trapasso, Realtor.com | Dec 2, 2020

Few will be reluctant to say goodbye to 2020. With vaccines rolling out, the days of the deadly pandemic that bludgeoned the nation’s economy seem to be numbered. Good riddance! But the soaring home prices that became a hallmark of the COVID-19 crisis may be here to stay.

Realtor.com®’s 2021 housing forecast predicts record-high prices will continue rising in 2021, delivering a blow to first-time buyers and those on a budget. Mortgage interest rates, which hit historic lows this year and helped fuel the go-go growth in U.S. housing markets, are also expected to tick up again, making monthly housing payments ever more expensive.

So folks shouldn’t hold their breath for a bargain.

However, the pace of the wild price growth seen in 2020 will slow. Prices are expected to jump 5.7% next year as a result of more properties forecast to hit the market, particularly in the second half of next year. While still unwelcome news for buyers, the double-digit price hikes seen this year aren’t expected to carry over into the new year.

“We expect affordability to become a bigger challenge. It’s going to make [housing] more expensive,” says realtor.com Chief Economist Danielle Hale. “[But] home prices will rise slower than this year, on the upper end of what we consider normal price growth.”

The forecast anticipates mortgage rates will begin slowly going up toward the last half of 2021, reaching 3.4% by the end of the year. Mortgage rates are currently at an all-time low of just 2.72% for 30-year fixed-rate loans in the week ending Nov. 25, according to Freddie Mac. While a roughly 70 basis point rise isn’t dramatic, it will make those monthly mortgage payments even pricier. This has the potential to price out some buyers or force others to purchase cheaper abodes in less desirable locations.

However, even higher prices, and therefore higher required down payments, aren’t likely to keep the hordes of determined buyers at bay.

Sales of existing homes (i.e., previously lived in abodes) are projected to increase 7% in 2021. That’s coming as folks stuck inside their homes for months on end are seeking larger residences or ones with different features. Younger millennials are competing with older members of Generation Z for starter homes, and baby boomers are downsizing. Many apartment dwellers are also seeking homes on their own.

Ironically, it’s those high prices that are keeping prices from rising even further.

“Home prices can’t outpace income growth indefinitely. The higher prices rise, the harder it is for more buyers to get into the market. That tends to dampen demand,” says Hale. That means that with less competition, prices don’t have as much room to rise.

Watch: Economic Update: Are We Making Progress Yet?

———

The bright spot for buyers is that more homes are likely to become available in the last six months of 2021. That should give folks more options to choose from and take away some of their urgency. With a larger selection, buyers may not be forced to make a decision in mere hours and will have more time to make up their minds.

The inventory bump is expected to be due to a combination of more sellers listing their properties as well as builders completing more abodes. Realtor.com predicts single-family housing starts, which are homes that have begun construction but aren’t yet completed, will rise 9%. And it’s sorely needed as there was an estimated shortfall of almost 4 million new homes heading into this year.

The new construction, while often more expensive than existing homes, are likely to appeal to move-up buyers looking for larger abodes with the latest amenities. Once those folks purchase these brand-new abodes, they typically list their existing homes, adding more inventory to the market.

“A lot of that new construction is not necessarily targeted at first-time buyers,” says Hale. “But we have seen builders shift what they’re building to better reach first-time home buyers.”

While 2021 is expected to be another banner year for sellers, most are also buyers. And while they can use their home equity to help finance their new abode, they’re still likely to be affected by the inventory shortage and loftier home prices and mortgage rates.

“Sellers are still expected to get top dollar for their home sales,” says Hale. “The biggest challenge is finding their new home.”

However, if 2020 has taught us anything, it’s that everything can change in an instant. If the nation undergoes additional lockdowns due to COVID-19, then fewer homes may go up for sale and the market could slow. If everything goes well with the vaccines being rolled out early, then the housing market could benefit with additional inventory and sales.

Another wildcard is the possibility of sustained economic pain. The country could still fall into a double-dip recession if unemployment remains high and businesses continue to suffer. Most folks need jobs to afford home purchases. If the economy doesn’t improve, it could put a dent in the market.

“The value of housing is tied to the economy,” says Hale. “As long as the economy continues to rebound, I expect the housing market will do well.”

Bay Area exodus accelerates at year-end as some seek to avoid tax hikes in 2021

By Mark Calvey, SF Business Times, November 24, 2020

The Bay Area exodus, which accelerated amid Covid, appears to be gaining more steam in the final months of 2020. Moving out of the state by year-end could help those leaving avoid being hit by a California income tax increase next year that might be retroactive to the start of 2021.

“I’m seeing an acceleration of clients — not to mention friends and neighbors — leaving California,” Paul Bleeg, a partner with accounting firm EisnerAmper in San Francisco, told me Tuesday. “The destinations vary: Montana, Nevada, Tennessee, Florida, Texas, Utah and elsewhere.”

Bleeg said factors fueling the acceleration include anticipation that California taxes will move higher in the year ahead and the shift to working from home amid the pandemic.

“The majority of those moving are people who’ve been working from home for several months or more and now realize they could pay less in taxes by working out of state,” Bleeg said. “Once they get the OK from their employer to work remotely in another state, away they go.”

California has a history of raising income taxes retroactively to the start of the year, as the state did in 2012, when taking the top tax rate to 13.3% — the nation’s highest. This year, proposed legislation to raise the top rate to 16.3%, again retroactively, didn’t pass. But many expect the state to consider a tax hike again in 2021.

Those who have left in recent weeks include Ron Suber, a prolific fintech investor who moved from San Francisco to Boulder, Colorado, in late September. Suber may be blazing a trail, given the reaction he’s receiving from his decision to leave California.

“The number of calls, emails, inquiries and outreach over the past two months has been staggering,” Suber told me Tuesday from his new hometown. “It’s not about ‘why’ but about ‘where.’ Many are currently doing their due diligence on where they might go.

“It’s not just to the warm and zero-state-income-tax states,” Suber said, noting that some are considering moves to Arizona, Utah, Oregon and Colorado, among other destinations.

1. Others that have recently moved from the Golden State include Dropbox (NASDAQ: DBX) CEO Drew Houstonand Splunk (NASDAQ: SPLK) CEO Douglas Merritt, who both recently purchased homes in Austin, with plans to make the Texas capital their permanent home, The Information reported this week, noting that some Splunk employees are already asking executives whether they too should move to Austin. Palantir co-founder Joe Lonsdale is also moving from San Francisco to Austin, taking the headquarters of his venture firm, 8VC, with him. Palantir recently moved its headquarters from Palo Alto to Denver.

Keith Rabois, a veteran of Paypal, LinkedIn and Square, said this month that he too is moving, to Florida.

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The U.S. Census Bureau’s state-to-state migration figures released this month showed that the exodus was roaring even before Covid struck. Texas was the most popular destination for those leaving the Golden State in 2019.

While the early migration to California was evident in wagon trains crossing the plains, today’s exodus out of the state can be seen on a variety of social media.

Suber’s post on LinkedIn announcing that he was heading to Boulder received more than 135,000 views, with more than 170 people weighing in on his decision.

“Sure you won’t miss the fires, traffic, homelessness and high taxes, Ron Suber?” one person commented. “Congrats on yet another strong, strategic move.”

Glen Bell – (510) 333-4460   jazzlines@sbcglobal.net

The post Glen’s SF East Bay Real Estate Market Update November 30, 2020 appeared first on Glen Bell.

September 30, 2020 – Real Estate Market Numbers

By Glen Bell   (510) 333-4460

Here’s a quick summary of what’s going on in the San Francisco East Bay real estate market as of September 30^th.

I’d like to start out with a quick quote coming from Zillow and Rismedia:

“More sellers are making their way onto the market, but it’s still not enough to offset a supply shortage as a frenzy of buyers look to take advantage of low interest rates. According to Zillow’s most recent Weekly Market Report, buyer demand is still outpacing new supply.”

Yes, sales are up. Pendings are up by 30% compared to last year. Inventory on the other hand is down. It’s been flat over the last 5 months. Based on normal seasonal influences, we typically see a steady increase from the beginning of the year through to the end of September. Since May 1^st our inventory is actually down by 2.7%. In fact, it’s the lowest I’ve seen for a September since I started tracking statistics going back to 2008. I’ve made this same statement each month since May. We have a 36 day supply of homes for sale today. Last year at this time, there was a 48 day supply.

Although there was a big “pause” in the market mid-March through mid-May due to COVID-19 Shelter in Place, we’ve bounced back, picking up where we left off early spring in what now looks like a strong sellers’ market again.

You can see this based on the supply and demand ratio that I keep track of. We’re at 1.51 indicating a “sellers’ market.” Last year at the end of September, we were .76. The year before that; .71. In fact this is the highest we’ve seen this number in September since our recovery began in 2012 and 2013.

Days on market are also starting to come down.

We’re seeing a bit of a migration coming out of SF and South Peninsula. Some movement to the East Bay, some to the Central Valley and some even out of the state altogether. This is primarily due to being able to work at home, high costs, smoke, traffic, etc

We’re seeing a softening in some of those markets plus rents have been coming down

Here are some highlights for the 39 East Bay Cities that I track:

• The month’s supply for the combined 39 city area is 36 days. Historically, a 2 to 3 months’ supply is considered normal in the San Francisco East Bay Area. As you can see from the graph above, this is normally a repetitive pattern over the past four years. Supply is less when compared to last year at this time, of 48 days.

• Our inventory for the East Bay (the 39 cities tracked) is now at 2,129 homes actively for sale. This is fewer than what we saw last year at this time, of 3,226. We’re used to seeing between 3,000 and 6,000 homes in a “normal” market in the San Francisco East Bay Area. Pending sales increased to 3205, higher than what we saw last year at this time of 2,463.

• Our Pending/Active Ratio is 1.51. Last year at this time it was .76.
• Sales over the last 3 months, on average, are 3.1% over the asking price for this area, Higher than what we saw last year at this time, of 2.7%.

Recent News

Bay Area home buyers scoop up shrinking inventory at furious pace

By Kathleen Pender, SF Chronicle Oct. 19, 2020 

The Bay Area real estate market continued its roaring recovery in September, as buyers took advantage of ultra-low mortgage rates to scoop up a shrinking number of homes for sale at an astonishing pace.

The median price for an existing, single-family home in the Bay Area was $1,060,000 in September, which was down 0.7% from August’s all-time high but up 20.5% from September of last year, according to a California Association of Realtors report issued Monday.

Statewide, the median price set a fourth consecutive monthly record, rising to $605,680, up 0.8% from August and 17.6% year over year.

More alarming for prospective home buyers: The median number of days it took to sell a California single-family home fell to 11 in September, the lowest number recorded since the association started keeping track in 1982 and down sharply from 24 in September 2019. In the Bay Area, the median time on market narrowed to 13 days in September from 15 in August and 23 in September 2019.

“Buyer demand remains robust. We see that in the mortgage applications, we see that in the price numbers for the Bay Area, in the unsold inventory numbers which declined. That is driving this rebound in sales, but it is also making the market more competitive. Homes are selling quicker and for buyers, there’s not a lot of inventory to choose from,” said Jordan Levine, the association’s deputy chief economist.

Agent Justin Palmer of Avenue 8 represented a family that is closing this week on a home in the Oakmore section of Oakland. It was listed at $1.2 million, attracted multiple offers and sold in less than two weeks for $1.45 million. It has almost 3,200 square feet so on a price-per-square-foot basis, “it was really good and it appraised for a higher number than they bought it for,” Palmer said.

The buyers had been renting in San Francisco. “Like most people, this year made them reevaluate their lives and preferences. They were seeking a little more space so they could both work from home and wanted more space for their young child,” Palmer said. The seller was a widow ready to downsize.

The sale epitomized what has been going on in the Bay Area. “Oakland in general this year has been on fire,” although condos are cooler than single-family homes. “We’ve seen such a large migration from San Francisco, people needing more space, whether that’s outdoor space or room for a second office,” Palmer said. The pandemic has absolutely pulled sales forward. “I think a lot of people’s five-year plans were condensed into 2020.”

On a month-to-month basis, the median price paid for a home in September fell in Solano, Contra Costa and San Mateo counties, (down 2.9%, 2.7% and 2.2%, respectively), and rose in all other Bay Area counties, led by Napa and Marin (up 3.8 and 2.5%, respectively).

Year over year, prices rose in all Bay Area counties, ranging from 8.1% in San Francisco to 20.6% in San Mateo.

Sales remained brisk, up 2.6% month-to-month and 34.2% year over year. They were especially strong in San Francisco and Marin counties, up 90.2% and 53.4% respectively, year over year. The report includes sales of existing, single-family detached homes advertised on a Multiple Listing Service. It excludes new construction and condominiums, which make up a larger percentage of sales in San Francisco than in other counties.

Condos, especially in the city’s downtown and South of Market areas, have been arguably the weakest spot in the Bay Area as buyers have cooled on communal, high-rise living during a pandemic. However, separate data from the Realtors association shows that San Francisco condo sales in September were up about 30% from August and 63% from last September, not as robust as single-family home sales but hardly a slowdown. The median price paid for a San Francisco condo in September was about $1.2 million, down 4.2% from August and down 7.8% year over year.

Condos were “more of a mixed bag,” with a “big increase in sales even as the price has softened,” Levine said.

For the Bay Area as a whole, condo sales last month were up 11% from August and 36% from last September while prices rose 2.5% and 6.4%, respectively.

“We do see more weakness on the rental side of the market due to the nature of the downturn we are in, where the effects of this pandemic-related shutdown have been borne by folks at the lower end of the income spectrum,” who tend to be renters, Levine said.

That could deter some investors from buying lower-end properties to rent out, which could explain some of the relative weakness in condo pricing.

Sales in resort communities remained especially brisk in September as buyers unable to travel clamored for vacation homes, often where they could work remotely. South Lake Tahoe home sales increased 105.4% year over year.

Ultra-low mortgage rates and constrained supply, especially for lower-priced homes, have fueled price increases. The number of active listings statewide fell 56% year over year for homes priced at less than $1 million, compared to a 30.4% drop for those listed between $1 million and $3 million and a 19.4% decrease for homes over $3 million.

Mary Edwards, a Coldwell Banker agent in San Anselmo, said the market is still “going pretty crazy,” partly because “we didn’t have a true springtime like we usually have in February, March and April” because of shelter-in-place restrictions.

She and her business partner, Linda Gridley, listed a home on Paradise Drive in Tiburon in late September for $2.8 million. “We were marketing it as, ‘Have a resort in your own backyard staycation.’ It had a boat dock and a private beach,” Edwards said. More than 60 people, most from San Francisco, came to see it. “We took offers a week later and it closed in seven days, all cash, no contingencies” to a San Francisco couple for $3,088,888. “I know several clients who were going to buy a second home in Tahoe but decided to stick around and get a bigger place” in Marin.

“With the statewide home price hitting new highs for the past four months, it’s sounding like a broken record as California home sales and prices continue to outperform expectations,” the association’s chief economist, Leslie Appleton-Young, said in a press release. “However, with the shortest time on market in recent memory, an alarmingly low supply of homes for sale, and the fastest price growth in six and a half years, the market’s short-term gain can also be its weakness in the longer term as the imbalance of supply and demand could lead to more housing shortages and deeper affordability issues.”

California home prices to grow more slowly next year, Realtors forecast, but sales may be stronger

Kathleen Pender, San Francisco Chronicle, Oct. 13, 2020

Ultra-low mortgage rates and pent-up demand for single-family homes will offset continued economic uncertainty and a supply shortage in 2021, with the net result being a 3.3% increase in California home sales and a modest 1.3% increase in the median price next year versus 2020, according to a California Association of Realtors forecast published Tuesday.

With only a few months left to go, sales this year are expected to be 4.5% lower than last year but prices are likely to be 8.1% higher. Last year at this time, the association predicted that 2020 sales would increase 0.8% and prices would rise 2.5%, but that was before the coronavirus pandemic upended forecasts of all kinds.

Sales this year were weaker than expected mainly because shelter-in-place orders brought the real estate market to a near standstill for several months starting in March, although sales have since rebounded.

“Prices were a lot stronger (than anticipated) because we were not forecasting mortgage rates to go down to 2.8%,” said Jordan Levine, the association’s deputy chief economist.

Some of this year’s price increase was driven by sales of luxury and second homes. The median is the price at which half of homes sold for more and half for less, and can be influenced by a change in the mix of high- and low-end homes being sold. Robust sales of multimillion-dollar homes are “pumping up the median price,” Levine said. “The stock market came back a lot faster than the labor market. That enabled a quicker recovery at the upper end.”

It’s more evidence that pandemic “really had a disproportionate impact. People in professional services tend to be higher-income individuals and were able to carry on” better than people in lower-paying occupations.

In 2021, “we do expect the market to shift more toward owner-occupant, entry-level homes,” Levine said. That’s why price gains next year will be “a little more muted” than this year.

Rising interest rates could threaten affordability, but the association predicts that 30-year fixed mortgage rates will average 3.1% in 2021, down from 3.2% in 2020 and from 3.9% in 2019, and still low by historical standards.

The association’s forecast covers existing single-family homes, not condos or new construction. It did not break out forecasts for regions within the state, but San Francisco is expected to be the strongest in the state, according to Selma Hepp, deputy chief economist with CoreLogic.

She predicted that between August 2020 and August 2021, the median price of existing, single-family homes and condos will rise 7.8% in San Francisco and San Mateo counties, 6.9% in Santa Clara and San Benito counties, 4.5% in Alameda and Contra Costa counties, 2% in Marin County, 13.2% in Napa County and 0.6% in Sonoma County.

By comparison, she expects prices will be 5% higher throughout California and flat nationwide.

One reason the Bay Area will do better than most is because it has a lower percentage of homes in forbearance and higher average homeowner equity than most places.

Homeowners with government-backed mortgages who have a financial hardship because of the coronavirus can request a forbearance, which allows them to postpone payments, without incurring penalties, for up to 12 months. Next year, as their forbearance period expires, many will be able to work out a modification and keep their homes, but if they can’t, some may be forced to sell and that could put downward pressure on prices.

The more equity they have in their homes, the more options they will have, such as refinancing, Hepp said. The average homeowner equity in San Francisco and San Mateo counties is just over $1 million, she said. The statewide average in the second quarter of this year was $408,000, second only to Hawaii with $450,000 in average homeowner equity. The U.S. average was $185,000.

In September, economists with the UCLA Anderson School of Management said construction of new housing will be an area “of particular strength” in the California economy next year. They predicted “a quick recovery to pre-recession levels, with residential building permits almost back to their 2020 first quarter level by year’s end.”

Jerry Nickelsburg, director of the UCLA Anderson Forecast, said low interest rates, the state’s chronic housing shortage, pent-up demand and “some movement on the regulatory side,” making it easier to build new units, will encourage developers to build. By the fourth quarter of 2022, he expects permit issuance, for rental and owner-occupied housing statewide, will hit 130,000 units on an annualized basis, compared with an estimated 117,400 units at the end of this year and 110,000 units at the end of last year. That increase of about 12,600 units over the next two years includes the replacement of some homes destroyed by wildfires.

“That means an increase in demand for construction workers. That is a bright spot when some of our sectors that are lagging behind,” Nickelsburg said. “It’s not a barn-burner, but it’s a bright spot.”

Home Prices Up 14%, But Price Growth May Wane Soon

Redfin, October 5, 2020

he median home sale price increased 14% year over year to $319,769—the highest on record, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. The 14% jump was the largest since August 2013. Since the four-week period ending July 5, home prices have increased 6.5%. Over that same period in 2018 and 2019, prices declined an average of 4.2%

Below are other key housing market takeaways for 434 U.S. metro areas during the 4-week period ending September 27.

• The median asking price of new listings was up 12.8% from a year earlier. This growth rate has been declining since the four-week period ending August 30, when it peaked at 15.7%.
• Pending home sales climbed 30% year over year.
• New listings of homes for sale were up 5% from a year earlier. Year-over-year growth in new listings have been above 5% since the four-week period ending August 16.
• Active listings (the number of homes listed for sale at any point during the period) fell 28% from 2019 to a new all-time low. The rate of year-over-year supply declines has remained consistent at this level for the past few months.
• 45.8% of homes that went under contract had an accepted offer within the first two weeks on the market. This has also held relatively steady for the last 17 weeks.
• The average sale-to-list price ratio, which measures how close homes are selling to their asking prices, rose to 99.4%—an all-time high and 1.2 percentage points higher than a year earlier.
• For the week ending September 27, the seasonally adjusted Redfin Homebuyer Demand Index was up 34.8% from pre-pandemic levels in January and February.
• Mortgage applications decreased 2% week over week during the week ending September 25. For the week ending October 1, 30-year mortgage rates fell to 2.88%. Rates have been below 3% since late July.

“The question on everyone’s mind is ‘how fast can prices keep rising?’,” said Redfin chief economist Daryl Fairweather. “Although the housing market is still red-hot, there are some early signs we may be nearing peak price growth. Sellers’ asking prices are still up significantly from last year, but by a lower rate than they were growing during the summer. Mortgage applications are also beginning to wane, and more new listings are coming onto the market. This is likely to be as good as it gets for home sellers, who definitely have had it very good for a very long time.”

Lack of strong growth in new listings is likely a direct result of the ongoing pandemic. In a recent survey of over 1,400 homebuyers and sellers, 20% of respondents said that now is a bad time to sell a home, up from just 9% in the first quarter of the year. In the same survey 38% of home sellers said that they have health or safety concerns due to the coronavirus pandemic, compared to just 8% of homebuyers who cited coronavirus as a concern.

People are leaving San Francisco. After decades of growth, is the city on the decline?

By Roland Li, SF Chronicle, October 10,2020

Plunging BART and Muni ridership. The weakest online sales tax collections in the state. A 20% drop in apartment rents. Spiking office vacancies.

PEOPLE ARE LEAVING SAN FRANCISCO. AFTER DECADES OF GROWTH, IS THE CITY ON THE DECLINE?

San Francisco’s bleak economic vital signs over the past six months strongly suggest residents are leaving amid record job losses, the entrenchment of remote work, and a coronavirus pandemic that shows no signs of ending.

It’s still unclear how many people have left, but moving vans and Medium posts tell the story of an ongoing migration. Weakness in the rental market and virtually flat online spending during shelter-in-place show that residents aren’t just staying home, they’re leaving, experts say. The city’s ability to attract new residents or lure old ones to return will be critical to avoid punching a giant hole in a local budget that has swelled to almost $14 billion.

In an increasingly virtual economy where daily goods are delivered not for convenience but out of pandemic-driven necessity, all you have to do is count the Amazon boxes.

Between April and June, the nine counties across the Bay Area saw big drops in brick-and-mortar sales taxes as orders to stay home took effect, ranging from a 17% drop in Santa Clara County to a 53% drop in San Francisco, compared to the prior year. But eight of the counties — everywhere but San Francisco — saw major jumps in online sales taxes, as high as 36% for Contra Costa County.

San Francisco saw only a 1% increase in the tax collected on online sales. That figure was by far the worst not only in the region, but among California’s 20 largest counties. Los Angeles County saw a 31% increase in online sales taxes, San Diego County saw a 38% jump and Sacramento County saw a 32% spike.

“That’s a sign to me that people aren’t here,” said Ted Egan, San Francisco’s chief economist.

The empty streets are reminiscent of the aftermath of the dot-com bust of the early 2000s, said Noni Richen, president of the Small Property Owners of San Francisco, an advocacy group.

Her members have former tenants who have left the city because, after losing their jobs or having classes shifted to online, they saw no reason to stay.

“There is a decline in occupancy,” Richen said. “They’re moving home to mom and dad or somewhere cheaper.”

Real estate data firm Zumper reported a 20% annual decline in San Francisco’s median one-bedroom rents this month, the largest drop among major cities. Inventory of for-sale homes and condos reached a 15-year high amid a flood of new listings, though prices for single-family homes are still rising, according to brokerage Compass.

One difference compared to the dot-com days is that tech titans like Google and Facebook, which have major offices in both San Francisco and Silicon Valley, have not cut jobs. Richen said she was encouraged that the companies have not scaled back, though they are allowing workers to stay remote until next summer.

“I think San Francisco will recover,” Richen said. “I think they will bounce back.”

Between February and August, the labor force in the San Francisco-Redwood City-South San Francisco metro area was down 4.5%, higher than the 4.1% drop for the state and 2.3% drop nationally. It’s consistent with evidence that urban areas have been hit harder than the rest of the country and could reflect people moving out of San Francisco, according to the Federal Reserve Bank of San Francisco.

Chris Thornberg, founding partner of research firm Beacon Economics, said talk of San Francisco’s doom and decline is overblown.

“As soon as the virus is under control, the economy is going to bounce back like nobody’s business,” he said, predicting a recovery in San Francisco by next spring. “I don’t think you need a vaccine.”

He said that excessive restrictions on business reopenings were unnecessary and ineffective. “I don’t think there’s any way to stamp this disease out by shutting down the economy,” he said.

But San Francisco officials remain cautious. There is still no timetable for when nonessential office workers can return. More tech companies — who now dominate the ranks of San Francisco’s largest private employers — are embracing remote work, for longer time periods or in some cases indefinitely.

“That opens up a huge question: When are they going to come back? Are they going to come back?” Egan said.

Bay Area rents keep plummeting, especially in S.F. — the latest data by city

By Kellie Hwang, SF Chronicle, October 2, 2020

Housing rents continue to decline in the Bay Area amid the coronavirus pandemic, especially in San Francisco, which has notoriously had the country’s highest rental prices after overtaking New York City years ago.

According to the most recent reports from private listing websites Apartment List and Zumper, rental prices have plummeted 20% in the city so far this year compared with the same time last year.

Zumper found the median cost of a one-bedroom in San Francisco last month was $2,830. The company analyzes rental data from more than 1 million active listings across the country. It includes new construction and excludes listings that are currently occupied or no longer available.

“Not only is this drop among the largest yearly decreases Zumper has ever recorded in our history of tracking rental prices, but it was also the first time the median one-bedroom price in San Francisco dipped below $3,000,” said data analyst Neil Gerstein in an email. “These combined trends show just how drastically the market has changed in the nation’s most expensive city to rent.”

Apartment List reported a considerably lower September median cost for a one-bedroom in San Francisco, at $2,240. The median for a two-bedroom apartment was $2,590, a 5.2% decline from the previous month. Its methodology differs from Zumper’s: It starts with statistics from the Census Bureau and Department of Housing and Urban Development, and it includes rents for older units and those in lower-income neighborhoods.

By either measure, the Bay Area continues to be the priciest market for renters in the nation. Zumper found that the top five rental markets in the country includes three Bay Area cities: San Francisco tops the list, with San Jose and Oakland coming in fourth and fifth, respectively.

San Jose’s rental prices haven’t changed much from last month at $2,230 for a one-bedroom, and decreased 1% for a 2-bedroom at $2,770. In Oakland, the median cost for a one-bedroom declined 3% to $2,130, and decreased 1% for a two-bedroom to $2,770.

Nationally, Zumper listed New York as the No. 2 most expensive rental market and Boston as No. 3. New York’s rents dropped 4% from the prior month to $2,600. Gerstein said that while New York City has also had historic price drops during the pandemic and renters appear to be taking advantage of declining rent in both cities, there is a notable difference.

“New York’s migration inflows have returned to pre-March levels, while San Francisco’s have not,” he said. “Both cities continued to experience large migration outflows, but the differences in the two cities’ migration inflows may explain their diverging price trends and could lead to rental prices in New York stabilizing faster than in San Francisco and overtaking the top spot.”

And nationally, Zumper’s report shows a decrease of 0.1% from the previous month for a one-bedroom to $1,231, with the year-over-year decline at 0.6%.

In the San Francisco metro area, Apartment List showed Oakland had the least expensive rents, at $1,770 for a one-bedroom and $2,090 for a two-bedroom.

A number of East Bay cities did not see much of a rent decline from the previous year: Pleasanton and Walnut Creek each decreased only 0.1%, and Hayward went down 0.9%.

High housing costs keep Californians poor

By DAN WALTERS | Orange County Register, September 20, 2020

Congratulations California, you’ve done it again.

The Census Bureau has once again found that California has the highest real-world poverty rate of any state, 17.2 percent over the previous three years and much higher than the national rate.

The “supplemental” poverty rate includes factors ignored by the outdated “official” poverty rate, such as living costs. And our sky-high living costs, particularly for housing, impoverish at least 7 million Californians.

We topped the poverty charts even as California’s overall economy was booming in the 2017-19 period. The state now is mired in its worst recession since the Great Depression, thanks to the COVID-19 pandemic, and poverty has surely increased.

A new report from the California Policy Lab at the University of California reveals that in August nearly 20 percent of California’s workers were drawing unemployment insurance benefits, calling it “startlingly high.”

Moreover, even before recession struck, the Public Policy Institute of California, using methodology similar to that of the Census Bureau, had calculated that as high as our “supplemental poverty rate” may be, roughly the same number of Californians are in “near-poverty.” Combining the two categories means that about a third of the state’s residents are struggling to keep their heads above water.

The major driver of California’s high poverty indices is, as mentioned earlier, that too many Californians must spend too much of their incomes on housing due to meager construction.

The reasons for the failure to meet housing demand are many but one long-ignored factor — the insanely high cost of building so-called “affordable” housing — is beginning to be recognized.

Last year, I wrote about a $28 million city-financed project to rehabilitate 74 dilapidated, low-rent apartments in Sacramento and noted that it worked out to $378,000 per unit, markedly higher than the median cost of a detached, single-family home in Sacramento at the time.

Last week, two more examples found their way into print.

The Los Angeles Times did a deep dive into the tortured history of a low-income housing project in Solana Beach, a wealthy seaside community in San Diego County. Times reporters found that it originally was to cost $414,000 per unit, but by the time the developer pulled out after a decade of trying to line up financing and permits, it had exploded to $1.1 million.

The Times called it “an alarming example of how political, economic and bureaucratic forces have converged to drive up the cost of such housing at a time when growing numbers of Californians need it.”

“California leads the nation in the cost of building government-subsidized apartment complexes for low-income residents,” the Times said, reporting that its “analysis of state data found that apartments cost an average of about $500,000. In the last decade, the price tag has grown 26 percent, after adjusting for inflation.”

Solana Beach is not alone. The Times reported that in Alameda, an island community in San Francisco Bay, a low-income development called Everett Commons cost $947,000 per unit.

Meanwhile, back in Sacramento, city housing officials are still spending too much to get too little. The Sacramento Bee reported that redeveloping the downtown Capitol Park Hotel into tiny, 250-square-foot units for low-income residents costs more than $445,000 per unit, higher than the median price for a detached single-family home. At $1,100 per square foot of living space, it is double what a luxury suburban home would cost.

These are outrageous numbers, driven by bureaucratic tangles, misplaced environmental restrictions and high mandated labor costs, and unless state officials do something about them, we will never solve our housing shortage and we will continue to have shamefully high rates of poverty.

Glen Bell – (510) 333-4460   jazzlines@sbcglobal.net

The post Glen’s SF East Bay Real Estate Market Update September 30, 2020 appeared first on Glen Bell.

Glen’s SF East Bay Real Estate Market Update

August 31, 2020

Here’s a summary of what’s going on in the San Francisco East Bay real estate market as of August 31^st. I’d like to start out with a quick quote coming from Zillow and Rismedia:

“More sellers are making their way onto the market, but it’s still not enough to offset a supply shortage as a frenzy of buyers look to take advantage of low interest rates. According to Zillow’s most recent Weekly Market Report, buyer demand is still outpacing new supply.”

Yes, sales are up. Pendings are up by 24% compared to last year. Inventory on the other hand is down. In fact, it’s the lowest I’ve seen for an August since I started tracking statistics going back to 2008. We have a 36 day supply of homes for sale today. Last year at this time, there was a 45 day supply.

Here are some highlights for the 39 East Bay Cities that I track:

Sales are up from last month, but similar to what we saw last year at this time. Although there was a big “pause” in the market mid March through mid May due to COVID-19 Shelter in Place, we’ve bounced back, picking up where we left off early spring in what now looks to be a strong sellers market again. Prices continue to move upward, showing an 8.7% increase from last August’s median price point. However, it’s a bit of a mixed bag. More homes seem to be “sitting,” and taking longer to sell. We’re seeing more price reductions with more transactions falling out. Buyer’s are attracted to affordable, move-in homes with curb appeal as long as these rates remain at record lows.

Inventory remains relatively flat in August. This again, as in June and July, was unexpected. We normally expect to see more inventory by now. Our inventory available is 28.2% lower than what we saw last year at this time. This represents a 36 day supply of homes, compared to a 45 day supply last year at the end of August. This is the lowest I’ve seen for an August since I started tracking numbers in 2008. I’ve made this statement now four months in a row. The number of pendings improved only slightly compared to July, a good sign that we still have buyers. The number of pendings are 24.4% higher when compared to last year at this time.

The pending/active ratio continued to move upwards, moving even more into a sellers market similar to what we saw at the beginning of the year.  This is much higher when compared to last years’ number of .85. We’re now at 1.47. It’s the strongest market favoring sellers since the beginning of 2018. The pending/active ratio has been a benchmark that we’ve used as a measure of supply and demand to determine whether we’re in a buyer’s or a seller’s market. Typically, a number well above 1, (less inventory with more pendings) favors sellers. A number below 1 favors buyers.

• The month’s supply for the combined 39 city area is 36 days. Historically, a 2 to 3 months’ supply is considered normal in the San Francisco East Bay Area. As you can see from the graph above, this is normally a repetitive pattern over the past four years. Supply is less when compared to last year at this time, of 45 days.

• Our inventory for the East Bay (the 39 cities tracked) is now at 2,125 homes actively for sale. This is fewer than what we saw last year at this time, of 2,958. We’re used to seeing between 3,000 and 6,000 homes in a “normal” market in the San Francisco East Bay Area. Pending sales increased to 3,131, higher than what we saw last year at this time of 2,516.

• Our Pending/Active Ratio is 1.47. Last year at this time it was .85.
• Sales over the last 3 months, on average, are 2.3% over the asking price for this area, lower than what we saw last year at this time, of 3.0%.

Recent News

The Future of California Real Estate: Can the Golden State Survive?

By Clare Trapasso, Realtor.com, September 3, 2020

California has long captured the nation’s imagination with its promises of the rich life, from the days of the gold rush to the rise of Hollywood and its star-making machine, to today’s booming tech sector. With its breathtaking shoreline and strong economy, the state has become indelibly known as a place abounding in opportunities—for those eager to seize them.

Lately, however, California’s luster seems to be dimming.

A severe housing shortage, exacerbated by the coronavirus pandemic, had led to the most expensive home prices in the nation. Wildfires this summer have devastated the northern part of the state. In the midst of a deep recession, many Californians are being priced out of their communities. Others are questioning why they’re shelling out so much money each month to live there—especially with companies in places like Silicon Valley allowing employees to work from home, wherever in the world that home may be.

It’s all converging at once to test the state’s true appeal. Despite the odds, can the Golden State’s real estate market remain, well, golden?

“Nobody in their right mind would bet against California,” says real estate professor Christopher Leinberger of George Washington University, in Washington, DC. However, “the Golden State can’t be golden forever with the ridiculousness of the home prices.”

California’s home list prices reached a record high in August—and have experienced the second-loftiest increases in the nation, according to the latest data from realtor.com®. (Only Utah saw bigger price gains.) Nine of the 10 most expensive metropolitan areas in the nation are in the state. (We included only the 300 largest metros, which encompass the main city and surrounding suburbs, towns, and smaller urban areas.) The state’s median price tag was $720,050 in August—up a jaw-dropping 23.7% from a year earlier.

That’s more than 10 times California’s median household income of $70,489 in 2018, according to the latest U.S. Census Bureau data.

The price hikes are due to the dearth of homes for sale. The shortage has been going on for years, but it’s been compounded by the COVID-19 crisis. Shut in their abodes for months on end, Americans are seeking larger homes for working and schooling their children. But there simply aren’t enough properties to satisfy demand, with the number of new listings down nearly 11.1% from August of last year on realtor.com.

Leslie Appleton Young, chief economist of the California Association of Realtors®, attributes some of that rapid run-up in prices to rich, white-collar workers who can now telecommute buying up luxury properties in more remote locations. In July, sales of homes priced at $3 million and up increased by about 76.6% year over year, she says. Homes priced at $1 million and up now make up about 20% of the state’s sales.

“The challenge is, you have the next generation of home buyers, [but] it’s very difficult to buy in California,” she says. “We’re losing people who simply can’t afford to be here.”

Many Californians were already being priced out

The lack of affordable housing is partly responsible for the nearly 3.25 million Californians who left the state from 2014 through 2018, according to the latest U.S. Census data. It’s also led giant tech companies like Google and Facebook, whose well-paid employees are partly responsible for the acceleration of prices in the San Francisco Bay Area, to pledge to build affordable housing in the area.

Looking at migration patterns in the U.S., “people have been leaving California and the Bay Area in higher numbers than they have been arriving,” says Patrick Carlisle, chief market analyst in the Bay Area for real estate brokerage Compass. “That outflow was being balanced by foreign immigration for years.”

More recently, however, that inflow of foreigners has declined.

Before the pandemic, Gov. Gavin Newsom boasted California had the fifth-largest economy—in the world. But COVID-19 has dealt the state’s economy a blow. California had a 13.3% unemployment rate in July, the sixth-worst in the nation, according to the U.S. Bureau of Labor Statistics.

“The housing supply in California is the No. 1 priority,” says Dowell Myers, a housing demographer at the University of Southern California, in Los Angeles. If the situation doesn’t improve, the lack of housing “will stifle employment growth and undercut the economy,” he says.

The quality of life could deteriorate enough to spur more folks to leave and deter others from moving in, he says.

Wealthier tech workers can still afford to drop nearly $1.2 million on a median-priced home in Silicon Valley’s San Jose metropolitan area, according to realtor.com’s August list prices.

But many others realize they can pay a fraction of that to live in other hip cities with growing tech hubs, like Austin, TX, with a median list price of roughly $400,000; Salt Lake City, at $490,000; and Nashville, TN, at $396,000. Even other West Coast tech hubs like Seattle and Denver are significantly cheaper, with median prices of $625,000 and almost $540,000, respectively.

Departing residents are “much more of a threat than a fire or an earthquake” to the state, says Myers. Although it attracts well-educated, high-earning millennials from other states as well as foreigners, California might see these higher-earning transplants leaving after a few years.

“They feel like they can’t possibly live where they want to live and buy a house,” says Myers. “California could hold more of the recruits if it had cheaper housing.”

George Washington University’s Leinberger blames NIMBY (“not in my backyard”) attitudes, which have stymied the creation of new housing throughout the state. While many residents support new construction, they don’t want it in their own communities. They worry that creating more dense housing, such as apartment, condo, and townhome complexes as well as smaller homes, could lower their own property values. They also say it would tax the existing infrastructure, like schools and local services, and exacerbate traffic issues.

Even well-meaning local regulations can drive up building costs and lead to long delays that can stretch over a decade between an application being submitted and a shovel going into the dirt.

“This is a self-inflicted wound,” says Leinberger of the housing shortage.

Could the pandemic prompt more people to leave California?

Although there has been a steady stream of Californians leaving their home state for years, the pandemic could accelerate that trend.

With more white-collar workers able to work remotely, some are heeding the siren song of more affordable homes, lower taxes, and a cheaper cost of living outside California’s borders. Others are remaining in state, but forsaking the expensive cities and moving into less-expensive areas.

“In the short term, California is going to see more people leaving due to the high cost of living combined with the ability to work remotely,” predicts realtor.com Senior Economist George Ratiu.

“People are willing to pay a premium to live there,” says Ratiu. “Perhaps that premium is being reevaluated by a lot of younger people.”

California could see winning and losing real estate markets

While some of California’s housing markets may be forced to slow down, others will likely keep accelerating.

“California’s a big place. You’re going to have winners and losers within the state,” says Mark Zandi, chief economist of Moody’s Analytics. “The housing markets in those urban cores are struggling. That will continue throughout the pandemic.”

In the Bay Area, sales for single-family homes in San Francisco and larger residences in the more suburban counties have been brisk while condo sales within the city limits have dropped off as a result of the pandemic, says Bay Area analyst Carlisle. That’s driven by wealthy, white-collar workers who are able to work remotely.

In addition to the surge in interest in expensive, sprawling homes north of San Francisco, in Marin County and  Napa and Sonoma, buyers with means are trading their rentals and smaller homes in high-priced, urban areas for larger homes in more affordable, inland communities in California. Some are leaving the state altogether for hip cities with strong job markets.

However, many more are staying put. Southern California, including Los Angeles and San Diego, could fare better than Northern California’s Bay Area as it’s a little less expensive, says Matthew Gardner, chief economist of Windermere Real Estate. Residents who work in the entertainment and other Southern California industries may be less able to work from home as the Bay Area tech workers.

“We’re not talking about cities being abandoned,” says Carlisle. “Shifts in markets are shifts in degrees. Except for something like the housing bust of 2008, [markets] slow down.”

And no matter what trials it’s currently going through, California is still, well, California.

“It’s hard to envision a large exodus,” says Appleton Young. “We are [still] the tech hub, we’re the entertainment hub, we’re rich in natural resources and natural beauty.”

Zillow: Buyer Demand Continues Outpacing New Supply

By RISMedia Staff, August 31, 2020

More sellers are making their way onto the market, but it’s still not enough to offset a supply shortage as a frenzy of buyers look to take advantage of low interest rates. According to Zillow’s most recent Weekly Market Report, buyer demand is still outpacing new supply.

For the week ending Aug. 22, newly pending sales were up 16.5 percent YoY—the biggest increase since mid-February. In addition, homes are selling faster—coming off the market in just 13 days, which is also 13 days sooner than last year.

While the inventory gap is narrowing, new for-sale listings were still down 10.6 percent YoY that week. And because of the quick market turnaround, total for-sale inventory has fallen further below last year’s level—as of last week, there were 29.8 percent fewer homes on the market than the same time last year.

This is causing prices to continue rising. For the week, the median U.S. list price was $345,255—8.3 percent higher YoY and the biggest annual change since the week ending July 13. The median sale price was $277,500—5.1 percent over last year’s number. 

Home Prices Hit Record Highs. Is It a Bubble About to Burst?

By Clare Trapasso, Realtor.com, Aug 24, 2020

The nation’s surging home prices don’t seem to care about the recession the country is mired in. They can’t be bothered by the deadly coronavirus pandemic or the double-digit unemployment that’s come as a result. Instead, prices are defying logic, expectations, and even belief, as they shoot up to record highs amid an unprecedented health and economic crisis.

It has all led some to wonder: Are some markets getting too hot? Could a significant correction be around the corner?

Such questions have become louder in recent weeks, in the face of some startling growth numbers, particularly in some high-priced California and less expensive Rust Belt, Midwestern, and Southern markets.

In some of these metropolitan areas, prices have shot up by more than 20% in the past year alone. Just how sustainable is this seemingly irrational home price exuberance, anyway? Could we be entering the dreaded bubble territory once again?

Nationally, the median home list price rose 10.1% year over year in the week ending Aug. 15, according to the most recent realtor.com® figures. No one predicted such a dramatic increase compared with 2019—when the economy was strong, no one had heard of COVID-19 and social unrest hadn’t exploded.

In fact, many experts predicted prices would flatten, if not fall.

Reality check: If there is a current-day bubble, it bears little resemblance to the gigantic bubble created by subprime mortgages, which burst into the Great Recession. Then came the mass foreclosures, plummeting home values, and the scores of homeowners suddenly underwater on their mortgages.

This year’s sky-high prices are driven by a rush of buyers competing for a very limited supply of properties. More demand than supply equals higher prices.

“Some markets are overvalued,” says Javier Vivas, realtor.com’s director of economic research. “Growth of prices in a recession is pointing in that direction. Some markets are seeing increased risks of price corrections.”

Instead of another real estate fire sale, certain parts of the country could see price hikes slow down or flatten, or prices even come down—by just a little. That could happen if prices rise so high that homeownership becomes too expensive for the majority of would-be buyers.

So instead of a bubble popping, it’s more that home prices could come back to reality.

Typically, market corrections happen fairly quickly, within two or three months, as priced-out buyers make a beeline for the sidelines, says Vivas. This year, record-low mortgage interest rates are muddying the picture.

Rates under 3% for the first time ever are driving more buyers into the market and allowing them to stretch higher on what they’re willing to pay. Lower rates mean lower monthly mortgage payments. That’s allowing sellers to ask—and receive—more for their properties.

Those who weren’t able to buy in the spring because of the pandemic—along with buyers desperate for larger, single-family homes with big backyards after sheltering in place for months—are adding to the rising demand.

However, worries about the pandemic have led to a record-low number of homes for sale, as sellers decided to wait out the health crisis. Meanwhile, many builders were forced to pause projects in some parts of the country. That’s led the scrum of competing buyers to bid up prices in an effort to secure a property.

Most striking in 2020’s home price ramp-up is the fact that’s happening in some of the nation’s most expensive and cheapest markets alike.

“In the inexpensive markets, you have a ton of space for prices to grow. You can see them overheat and absorb that overheating better,” says Vivas. That’s unlike the already high-priced coastal areas.

“The outlook for them is a faster and broader correction, [with] slight declines in home prices.”

Price corrections could happen by the end of the year in areas where prices have risen very high—along with local unemployment rates, says CoreLogic’s chief economist, Frank Nothaft.

Why won’t we see another Great Recession-era housing bubble?

The sky-high prices of 2020 are being driven by an influx of buyers bidding up prices on a historically low number of homes on the market. Until more properties come online, that dynamic is unlikely to change.

The Great Recession had the opposite problem: There were many more homes available than qualified buyers.

In the aftermath of the housing bust, it’s become harder for buyers without good jobs and strong credit to score mortgages. This weeds out riskier borrowers. And unlike the last go-around, when builders were erecting residences at what seemed like a break-neck pace, the under-building of the last few years has exacerbated the housing shortage.

Even if the economy doesn’t improve by next year and a vast swath of Americans remain unemployed, we are not likely to see the flood of foreclosures that characterized the housing crash, partly because government protections could be extended.

“It doesn’t feel at all like last time, when the market was getting all pumped up by easy mortgage credit,” says Mark Zandi, chief economist of Moody’s Analytics.

Some of the nation’s most expensive housing markets are getting costlier by the day.

Median list prices surged in the Santa Maria, CA, metropolitan area, which includes tony Santa Barbara, CA. They were up no less than 44%annually in July, to reach $1,795,050.

That was the largest increase in the nation, despite the relatively high percentage of locals out of work (12%). In the Los Angeles metro area, prices increased by 24%, to a median $994,150.

They were considered two of the country’s potentially most overvalued markets, due to their massive price hikes, despite double-digit unemployment rates.

Gerd-Ulf Krueger, president of Krueger Economics, doesn’t expect prices in the Los Angeles area to slow down, let alone fall, unless residents on the higher end of the income spectrum (i.e., the 1%) lose their jobs or receive salary cuts.

While the unemployment rate in the Los Angeles metro area topped 18%in June, those at the top have been largely spared the financial pain experienced by those on the lower income rungs.

“The income gaps are very severe” in the Los Angeles area, Krueger says. The problem has also been exacerbated by a lack of new construction in the region, making it even more difficult for buyers to find affordably priced properties.

Sellers “are a little over-enthusiastic. They are realizing the wealthier or more affluent middle class still have money to buy homes.”

Pennsylvania has the most metropolitan areas that have experienced both the highest price increases and high unemployment. This puts them at risk of price corrections.

In the Pittsburgh metro, median list prices rose 25% in July compared with a year earlier, a rise that could make the market overvalued. (Metros include the main city, surrounding suburbs and towns and smaller urban areas.)

“It’s just a product of supply and demand,” says Pittsburgh-based real estate agent Bobby West of Coldwell Banker Realty Services. “There are so few homes that are coming on the market, those that do are selling within 24 hours, with more than one offer.”

“It was a mad rush” when real estate services reopened after the pandemic shutdown, says West. “My bet is things will cool down into the fall and the winter months as far as pricing goes.”

However, with a median list price of just $249,950—about 40% less than the national median—prices still have room to rise.

The old steel town of Allentown, PA, and the surrounding metro area, have seen price increases comparable to Pittsburgh’s, as the supply of homes for sale has dwindled. Median list prices shot up 21% year over year, to reach $278,500 in July, according to realtor.com data.

The area is benefiting from folks leaving the New York City and Philadelphia areas and heading to Allentown, where they can afford more spacious homes—particularly if they’re now able to work remotely due to the pandemic, says local Keller Williams real estate agent Faith Brenneisen. The city is about 90 miles west of New York City and 60 miles north of Philadelphia—and its homes are selling for a fraction of the prices in those two cities.

She’s receiving seven to 10 offers per listing and offers running $20,000 to $30,000 over asking for homes priced in the sweet spot of $150,000 to $250,000.

Median list prices were up in Reading, PA, by 24% to $272,450 in July, compared with the previous year. In Wichita, KS, they rose 22% to $246,150, they were up 19% in Fayetteville, NC, to $219,800; they increased 18% in Philadelphia to $340,000; they grew 17% in Canton, OH,to $190,000 and 16% in Mobile, AL, to $215,350. All of these areas also had unemployment rates at or above 10% in June, according to the most recent data from the U.S. Bureau of Labor Statistics.

Glen Bell – (510) 333-4460   jazzlines@sbcglobal.net

The post Glen’s SF East Bay Real Estate Market Update August 31, 2020 appeared first on Glen Bell.

Glen’s SF East Bay Real Estate Market Update

July 31, 2020

As a reference in describing the market we’re in, I’d like to start by quoting Leslie Appleton-Young, the Chief Economist for the California Association of Realtors, from an issue in the July/August magazine.

“Since the pandemic hit the 2020 forecast has been a moving target. We are now monitoring market stats on a daily and weekly basis — waiting for the monthly sales and price report is not helpful in a market that is constantly changing. In a normal year we model demand and supply, making reasonable assumptions about the strength of the economy, frequently creating different scenarios to prepare, at least mentally, for exogenous factors. This year that has all been thrown out the window because just about everything is unknown. At the end of the day, the recovery in the economy is inextricably tied to the path of the virus, the relief response of the government and consumer behavior. In short, we simply don’t know.”

No doubt that the COVID-19 has had its effects on our local real estate market. We haven’t seen dramatic changes just yet. What we have seen is a “mixed” bag. Low inventory levels and low interest rates continue to be the story of this market.

What we’ve seen since COVID-19 began, is that many sellers decided to delay or postpone coming onto the market until some of the uncertainty subsides. Many buyers have jumped back on the fence and are holding off. The uncertainty of their job being in jeopardy, a loss in income, health fears, or seeing a “big hit” in their stock portfolio has taken its toll. Although there may be fewer buyers out there, there are still even fewer homes for sale. Many are getting gobbled up now.

The C0vid-19 market is such a “mixed” bag right now that it’s difficult to wrap your hands around it or even try to predict what’s coming down the pike. As I’ve said before; this is unchartered territory. Affordable homes in the right location that are in somewhat move-in condition seem to be getting the most attention. For a while, many buyers were reluctant to make big commitments on cash reserves for the “high end” market or big time fixers. That market seemed to be a little “soft” in many areas but now looks to be changing yet again. Buyers may also be shying away from the “close quarters” of the more expensive condos. However, the “right” house, in the “right” location will still experience a competitive market with multiple offers.

Income properties are more sensitive to risk aversion. Eviction moratoriums, rent reductions, local pre-tenant ordinances being passed, COVID-19 related payment deferrals, have all taken their toll and made these properties less attractive to buyers.

Here are some highlights for the 39 East Bay Cities that I track:

Sales are up from last month, but 23.3% lower than last year’s numbers. Prices have been up slightly through spring but are now beginning to flatten out during the summer months. More homes seem to be “sitting,” and taking longer to sell. We’re seeing more price reductions with more transactions falling out.

The seasonal drop in inventory followed our normal pattern during the holidays. We watched the number of homes decrease by nearly 60% over November and December. Last year was somewhat unusual because we saw a late season start and early season end. Inventory at the end of December was at its’ 2^nd lowest level since I began tracking these 39 cities in 2006, with only 1163 homes for sale at the end of December. Our expectations normally are that new home listings begin to appear on the market as early as mid-January with a steady increase of inventory every month through to September, traditionally our high point.

Inventory decreased slightly in July by 1.2%. This again, as in June, was unexpected. We normally expect to see more than that in both months. That’s 36.4% lower than what we saw last year at this time. This represents a 36 day supply of homes, compared to a 51 day supply last year at the end of July. This is the lowest I’ve seen for a July since I started tracking numbers in 2008. I’ve made this statement now three month in a row. The number of pendings improved by a 8.3.7% compared to June, a good sign that we still have buyers. We’re also 17.8% higher when compared to last year at this time.

The pending/active ratio continued to move upwards, moving even more into a sellers market similar to what we saw at the beginning of the year.  This is much higher when compared to last years’ number of .78. We’re now at 1.44. It’s the strongest market favoring sellers since the beginning of 2018. The pending/active ratio has been a benchmark that we’ve used as a measure of supply and demand to determine whether we’re in a buyer’s or a seller’s market. Typically, a number well above 1, (less inventory with more pendings) favors sellers. A number below 1 favors buyers.

• The month’s supply for the combined 39 city area is 36 days. Historically, a 2 to 3 months’ supply is considered normal in the San Francisco East Bay Area. As you can see from the graph above, this is normally a repetitive pattern over the past four years. Supply is less when compared to last year at this time, of 51 days.

• Our inventory for the East Bay (the 39 cities tracked) is now at 2,159 homes actively for sale. This is fewer than what we saw last year at this time, of 3,395. We’re used to seeing between 3,000 and 6,000 homes in a “normal” market in the San Francisco East Bay Area. Pending sales increased to 3,118, higher than what we saw last year at this time of 2,646.

• Our Pending/Active Ratio is 1.44. Last year at this time it was .78.
• Sales over the last 3 months, on average, are 1.7% over the asking price for this area, lower than what we saw last year at this time, of 3.4%.

Recent News

Leslie Appleton-Young Chief Economist, CALIFORNIA ASSOCIATION OF REALTORS®

July/August 2020 Magazine Issue

 How has C.A.R. revised its housing forecast for 2020 to account for the coronavirus pandemic?

Since the pandemic hit the 2020 forecast has been a moving target. We are now monitoring market stats on a daily and weekly basis — waiting for the monthly sales and price report is not helpful in a market that is constantly changing. In a normal year we model demand and supply, making reasonable assumptions about the strength of the economy, frequently creating different scenarios to prepare, at least mentally, for exogenous factors. This year that has all been thrown out the window because just about everything is unknown. At the end of the day, the recovery in the economy is inextricably tied to the path of the virus, the relief response of the government and consumer behavior. In short, we simply don’t know.

Last August when we developed the 2020 forecast, we were looking at a good market constrained from being great by the twin hurdles of affordability and supply. On the foundation of a strong economy and attractive mortgage rates, we forecast that sales would be up slightly by 0.8 percent and the statewide median price would be up 2.5 percent to $607,900.

Fast-forward to the beginning of May with two months of pandemic-infused data under our belts, including horrific job losses: We revised the 2020 forecast done last fall to reflect the realities of the COVID marketplace with a -16.7 percent in sales and -3.7 percent in the median price. Just one month later, we had a few more weeks of data that were stronger than expected, revising the outlook for 2020 to -12.7 percent and the median price off just -1.1 percent. So we are updating our projections regularly, hoping for the best but always committed to getting an accurate picture of how the market is likely to evolve.

Some are worried about a repeat of the housing slump we saw during the Great Recession. How does the current situation compare to that of 2008?

So far it is very different. The Great Recession started in the housing finance sector with subprime lending and cash-out refis, putting those homeowners in harm’s way without a cushion to protect against falling prices. At the same time, the mortgage-backed securities created from these loans were rated to be less risky than they were and sold to investors around the world. When borrowers started to default on their loans, the crisis reverberated throughout the global financial system, financial institutions required government bailouts to survive, stock markets dove, and the economy slowed — the Great Recession was on.

Looking back, we can appreciate how relatively gradual the ramp up to September 2009 was compared to the speed of today’s drop. For example, it took two years for the cumulative total of initial claims for unemployment assistance to reach 37 million people. In 2020, there were 42.6 million Americans in this category in 11 weeks. Yes, 11 weeks.

Back to the housing slump. The key characteristic of the housing market in this period was the high level of foreclosed properties, the increase in inventory and, in California, the almost 60 percent drop in the statewide median home price. U.S. foreclosure filings increased 81 percent in 2008; in January 2009, 60 percent of the closings in California were REO (bank-owned properties). It was a time when short sales were the growth opportunity in real estate. Could that happen again today? It’s not likely for several reasons. The underwriting behind mortgages today is solid, household wealth is robust, the underlying fundamentals of the economy are strong, and demand for housing far outstrips the limited supply. Never say never, but a realistic look at today’s landscape does not suggest a repeat of the housing slump of 2009.

Do you think the pandemic will have a long-term impact on housing prices in California?

Not likely. The trajectory of California with a robust economy and an inadequate supply of housing is for continued appreciation of home prices over the long run. There are always scenarios in which a fall in prices in possible, but I don’t see any of them as likely at this point. In fact, as the economy emerges from its forced hibernation, the demand for different types of housing to accommodate the work-from-home world, along with geographic shifts fueled by the “work-from-anywhere” reality, will be game-changing. And on the foundation of low mortgage rates, these changes bode well for a continuation of the strong demand, constrained supply world the California market has inhabited for quite some time. That’s been our new normal.

Glen Bell – (510) 333-4460   jazzlines@sbcglobal.net

The post Glen’s SF East Bay Real Estate Market Update July 31, 2020 appeared first on Glen Bell.

SF East Bay Real Estate Market Update

June 30, 2020

By Glen Bell   (510) 333-4460

No doubt that the COVID-19 has had its effects on our local real estate market. We haven’t seen dramatic changes just yet. What we have seen is a “mixed” bag. Low inventory levels and low interest rates continue to be the story of this market.

What we’ve seen since COVID-19 began, is that many sellers decided to delay or postpone coming onto the market until some of the uncertainty subsides. Many buyers have jumped back on the fence and are holding off. The uncertainty of their job being in jeopardy, a loss in income, health fears, or seeing a “big hit” in their stock portfolio has taken its toll. Although there may be fewer buyers out there, there are still even fewer homes for sale. Many are getting gobbled up now.

The C0vid-19 market is such a “mixed” bag right now that it’s difficult to wrap your hands around it or even try to predict what’s coming down the pike. As I’ve said before; this is unchartered territory. Affordable homes in the right location that are in somewhat move-in condition seem to be getting the most attention. Many buyers are reluctant to make big commitments on cash reserves for the “high end” market or big time fixers. That market seems to be a little “soft” in many areas right now. Buyers may also be shying away from the “close quarters” of the more expensive condos. However, the “right” house, in the “right” location will still experience a competitive market with multiple offers.

Income properties are more sensitive to risk aversion. Eviction moratoriums, rent reductions, local pre-tenant ordinances being passed, COVID-19 related payment deferrals, have all taken their toll and made these properties less attractive to buyers.

Here are some highlights for the 39 East Bay Cities that I track:

Sales are up slightly from last month, but 38% lower than last year’s numbers. Prices have been up slightly through spring but are now beginning to flatten out during the summer months. More homes seem to be “sitting,” and taking longer to sell. We’re seeing more price reductions with more transactions falling out.

The seasonal drop in inventory followed our normal pattern during the holidays. We watched the number of homes decrease by nearly 60% over November and December. Last year was somewhat unusual because we saw a late season start and early season end. Inventory at the end of December was at its’ 2^nd lowest level since I began tracking these 39 cities in 2006, with only 1163 homes for sale at the end of December. Our expectations normally are that new home listings begin to appear on the market as early as mid-January with a steady increase of inventory every month through to September, traditionally our high point.

Inventory decreased slightly in June by 4%. This was unexpected. We normally expect to see more than that in June, typically one of our strongest selling m0nths of the year.  That’s 34.2% lower than what we saw last year at this time. This represents a 39 day supply of homes, compared to a 51 day supply last year at the end of June. This is the lowest I’ve seen for a June since I started tracking numbers in 2008. The number of pendings improved by a 23.7% compared to May, a good sign that we still have buyers. We’re also 7.4% higher when compared to last year at this time.

The pending/active ratio continued to move upwards, crossing more into a sellers market similar to what we saw at the beginning of the year.  This is much higher when compared to last years’ number of .81. We were at 1.02 last month. The pending/active ratio has been a benchmark that we’ve used as a measure of supply and demand to determine whether we’re in a buyer’s or a seller’s market. Typically, a number well above 1, (less inventory with more pendings) favors sellers. A number below 1 favors buyers..

• The month’s supply for the combined 39 city area is 39 days. Historically, a 2 to 3 months’ supply is considered normal in the San Francisco East Bay Area. As you can see from the graph above, this is normally a repetitive pattern over the past four years. Supply is less when compared to last year at this time, of 51 days.

• Our inventory for the East Bay (the 39 cities tracked) is now at 2,185 homes actively for sale. This is fewer than what we saw last year at this time, of3,317. We’re used to seeing between 3,000 and 6,000 homes in a “normal” market in the San Francisco East Bay Area. Pending sales increased to 2,878, higher than what we saw last year at this time of 2,679.

• Our Pending/Active Ratio is 1.32. Last year at this time it was .81.
• Sales over the last 3 months, on average, are 2% over the asking price for this area, lower than what we saw last year at this time, of 3.4%.

Recent News

Stunning rebound: Bay Area home sales surged nearly 70% from May to June; prices rose 3.6%

By Katheen Pender, SF Chronicle, June 16, 2020

The Bay Area home market saw an enormous resurgence in sales and a modest increase in prices from May to June, as pent-up demand and record-low interest rates collided with sparse inventory, according to a California Association of Realtors report issued Thursday.

Sales of existing, single-family homes rebounded 69.2%, the largest month-to-month sales jump since the association started keeping records for the Bay Area in 1990. Compared to June of last year, sales were down 7.8%. The median price rose to an even $1 million, up 3.6% from May and 4.2% higher year over year.

Because deals typically take around a month to close, June sales and prices largely reflect deals that started in May, as shelter-in-place orders eased and the economic outlook became “less-opaque,” said Jordan Levine, the association’s deputy chief economist. “I think the last couple weeks we have seen uncertainty increase,” he added.

On Monday, Gov. Gavin Newsom took steps to close down parts of the state’s economy that had reopened. On Thursday, the government reported that 287,732 Californians filed unemployment claims last week, up 8.7% from the week before and the highest since early May.

June’s sales surge represents a sharp turnaround from the May, April and March, when Bay Area home sales fell 51%, 37% and 12%, respectively, on a year-over-year basis as shelter-in-place orders and widespread economic uncertainty kept buyers and sellers on the sidelines.

“Pending sales hit bottom in late April,” Levine said. By late April and throughout May, demand was coming back as “the economy opened up slightly.” Also by May, people who were tired of living — and working — in cramped quarters were looking to expand.

What they found on the market was — not much. In June, there were just 5,304 active listings in the Bay Area, down 31% from 7,655 in June of last year. The only Bay Area county with an increase in active listings was San Francisco.

Falling mortgage rates also helped with affordability. On Thursday, the average rate on a 30-year fixed-rate mortgage fell to 2.98%, the first time it had ever dipped below 3% in the nearly 50 years since Freddie Mac has been tracking the rate on government-backed mortgages.

The association’s report does not include sales of condominiums, newly built homes and ones not advertised on a Multiple Listing Service.

The market for condos was generally weaker than for single-family homes last month. The median condo price fell to $701,000, down 0.6% from May and down 6.5% year over year. Condo sales were up 82% from May but down 22% from last June. The association reports condo numbers separately from its main report.

Jing Fang, a broker associate with the Compass real estate firm who works mostly with condo buyers in San Francisco, said he is seeing “a lot of momentum and activity. Buyers think there is a little bit of an adjustment in the market, and interest rates are below 3% now.” For one-bedroom units, “I’m not seeing much of a price reduction.” Two-bedroom units selling for close to $2 million “are a little soft.” She added that “sellers are pretty motivated. Otherwise they wouldn’t put their home on the market right now.”

Jessica Tsai and Marvin Lam are purchasing a one-bedroom unit with patio and den in a new condominium building that’s nearing completion on Third Street, in San Francisco’s up-and-coming Dogpatch. The couple put a deposit down in November because “we are engaged and wanted to spend a little bit more time in the city. We weren’t ready for the burbs yet,” Lam said.

They like Dogpatch for its proximity to the waterfront and new Warriors arena. Lam was planning to open a new business in the neighborhood. After the coronavirus hit, they monitored condo prices south of Market Street and found “more volatility” than before. “Some close above asking, some under, some still on the market longer,” Lam said.

“A lot of price reductions were in other areas. The new buildings in Dogpatch seem to have retained their value,” Tsai said. They’re going ahead with the purchase because “we still really like the property.”

Statewide, single-family home sales rose 42.4% between May and June and the median price rose 6.5% to $626,170, a record high. “A change in the mix of sales was one primary factor that pushed the median price higher in June, as sales of higher-priced properties bounced back stronger than lower-priced homes,” the association reported.

That was true in the Bay Area as well. In April, lower-priced homes were selling faster than higher-priced ones.

In June, “high-price home market segments around the Bay Area were extremely strong,” Patrick Carlisle, chief market analyst for Compass said in a report last week. “In San Francisco, houses selling for $2.5 million and above constituted 30% of all house sales, well above the 2-year monthly average of 18%.”

San Francisco overall, which has had some of the strictest shelter-in-place rules, has been the “weakest performing market as measured by supply and demand indicators (but not median price change) in the Bay Area in the last 4 months. However, it too has seen a very strong rebound from the huge declines immediately following (shelter-in-place) rules being implemented in mid-March,” Carlisle wrote.

He added that the San Francisco rental market “has been hammered by declining rent rates and increasing vacancy rates as newly unemployed residents leave the most expensive apartments in the country. Unemployment typically hits the rental market much harder than the for-sale market.”

If unemployment continues to rise, the “ripple effect” will be felt throughout the housing market, Levine said.

Bay Area home sales plummet during coronavirus, but prices rise

Home prices up in 5 of 7 counties

By Louis Hansen, Bay Area News Group, July 11, 2020

Bay Area home sales plummeted in May, falling by more than one-third in most counties and by nearly half in San Francisco as COVID-19 fears chilled buyers and sellers.

But the slowdown in transactions did little to slow prices — median sale prices rose noticeably in Santa Clara, Alameda and Contra Costa counties, according to Zillow data. The median home sale price for seven counties came in at $866,900.

Bay Area demand for scarce homes remained strong despite the shutdowns and constraints caused by the pandemic. “These numbers are pretty impressive. Pretty striking,” said Zillow economist Jeff Tucker.

The smaller pool of Bay Area house hunters shrugged off historic job losses, an ever-lengthening health crisis and economic uncertainty to snap up the few homes for sale at rates not seen since the peak of the market in 2017. Even limited in-person home tours and less personal meetings with brokers did not discourage these buyers.

The lure of record-low interest rates — hovering around 3.1 percent — has also encouraged many to start shopping.

Median prices for single family homes rose, year-over-year, in five of seven counties in May, according to Zillow. The median price for a home in Santa Clara County rose 4.6 percent to $1.25 million, grew 2.4 percent to $660,900 in Contra Costa County, increased 2.1 percent to $889,700 in Alameda County, jumped  5.9 percent to $462,100 in Solano County, and climbed 2.9 percent to $646,300 in Sonoma County.

Prices fell in the region’s two most expensive spots, but provided no bargains. The median sale price in San Francisco fell about one percent to $1.53 million and dropped 1.6 percent to $1.45 million in San Mateo County, according to Zillow.

Data for Marin and Napa counties was not available.

The market for condominiums in core Bay Area counties continued to crumble, with price drops nearing 15 percent in Santa Clara County, and smaller declines in San Francisco, San Mateo, Alameda and Contra Costa counties.

Tucker said the appeal of single-family homes — with yards and private space — has grown during the pandemic. Many condo units now have limited access to common areas, community gyms and outdoor spaces, and tighter living conditions could be a turn-off for some buyers.

Agents say buyers remaining in the market are serious and prepared to move. Some are reporting bidding wars for Silicon Valley properties, with low inventory fueling the market. And despite the growing reliance on remote work, few have noticed a run for distant suburbs with lower prices and bigger spaces.

Core Silicon Valley communities, including Palo Alto, Mountain View, Cupertino, Sunnyvale and Saratoga, have seen growing interest and sales over listing prices.

Compass agent Mark Wong of Saratoga said business remained brisk with motivated buyers. During the pandemic, he’s seen several clients looking to move from San Francisco high rises to single-family homes in the South Bay.

The tech economy has also remained solid, he added. “People are still buying and selling every single day,” Wong said. “They seem to be bullet-proof on their income.”

Buyers are shopping online and making quick decisions, he said, with offers being accepted as quickly as a day after a property has been listed. “Buyers just can’t wait,” he said.

Agent Tina Hand, president of the Bay East Association of Realtors, said demand remains strong along the I-880 corridor. Low mortgage rates have boosted buying power. “It’s free money,” she said.

Realtors have adapted to new rules, staggering home showings in one-hour intervals because open houses have been banned. The inventory of homes for sale in the East Bay has fallen, like the greater Bay Area.

The pandemic has changed some buyers’ habits. “People are now seriously looking at traditional single-family homes,” she said. “They’re looking for yards again.”

Home Sales Exceed Pre-Pandemic Levels for the First Time as Mortgage Rates Hit Another Record Low

By Sheharyar Bokhari, Redfin, July 15, 2020

Key takeaways for the week ending July 5

• Home sales were up 2% from pre-pandemic levels and are likely to continue rising; pending sales were up 10% during the same period.
• Weekly average mortgage rates fell to a new low of 3.03%, fueling homebuyer demand.
• New listings recovered to pre-pandemic levels for the third straight week, but can’t keep pace with buyer demand; the number of homes for sale was down 29% from last year.
• Nearly half of homes that sold during the week spent two weeks or less on the market, making the market feel “chaotic” for buyers.
• Low rates and low inventory pushed home sale prices up 7% from a year earlier.

With mortgage rates at a record low, pending sales and homebuyer demand remain above pre-pandemic levels

The housing market continued its recovery in the week ending July 5 despite the rise in COVID-19 cases. For the first time, home sales exceeded pre-pandemic levels from January and February, up 2% on a seasonally adjusted basis. Demand is being propelled primarily by record low mortgage rates; the average 30-year fixed rate was down to 3.03% for the week ending July 9. 

“The industry is responding to an avalanche of applications for refinances and purchases.” said Rob Foos, a mortgage advisor with Redfin Mortgage in Boston. “A combination of rock-bottom rates plus pent-up purchase demand has resulted in the highest levels of purchase applications in about a decade.”

Several leading indicators suggest that home sales will continue to increase in the coming weeks; pending sales grew 10% from pre-pandemic levels on a seasonally adjusted basis and the Redfin home-buying demand index has hovered around 20% above the pre-pandemic levels for seven straight weeks. Mortgage purchase applications were also about 15% above pre-pandemic levels. 

Potential sellers worry about finding their next home

New listings were at their pre-pandemic levels for three straight weeks, up 1% on average on a seasonally adjusted basis. But there aren’t enough new listings to satisfy the strong homebuying demand. As a result, the total number of homes for sale was down 29% from a year ago. Redfin agents report that sellers are now rarely citing coronavirus concerns as a reason not to list, but more often cite the lack of homes for sale itself as the thing that’s holding them back. 

“Some of my clients are considering selling, but it’s a matter of finding a home they can buy,” said Redfin agent Thomas Wiederstein in Phoenix. “Even if they do find a home that checks all the boxes, many move-up buyers can’t buy a new home before they sell their current one. With bidding wars so common, it’s very hard to get an offer accepted that’s contingent on the sale of the buyer’s current home.”

Lack of homes for sale fuels competition

Buyers face competition more often than not, as more than half of Redfin offers faced a bidding war in June for the second month in a row, and homes are going off-market quickly. The share of listings that went off market within two weeks stood at 45% this week, up from 35% a year ago. Shoshana Godwin, a Redfin agent in Seattle, is seeing a return to bidding wars and buyers waiving contingencies to make their offers more attractive. 

“We’re back to buyers waiving their rights to cancel the contract if something pops up during the inspection or they can’t get their loan approved. Buyers used to try to inspect the home before writing an offer, but now sellers are providing an inspection report upfront. That brings in even more bidders because they don’t need to spend $500 on an inspection just to make an offer,” Godwin said.

Redfin San Francisco agent Chad Eng describes a housing market that feels “chaotic” in the absence of pre-pandemic norms.

“Due to COVID-19, agents are scheduling back-to-back 15-minute in-person home tours instead of holding traditional open houses. If you miss your appointment, you’re out of luck. Sellers often set a deadline for buyers to submit offers so they can review all of their options at once, but now that there’s so much uncertainty, sellers who receive one strong offer are less willing to wait around to see what else trickles in. I’ve seen multiple sellers accept an offer before the deadline, meaning buyers who wait miss out on their shot at buying the home.”

With competition comes rising home prices. The average sale price for the week ending July 5 was $310,000, up 7% from a year ago. The big question is how high prices will go? Asking prices for newly listed homes continue to accelerate as well, rising 16% over the same week last year to $324,900. 

What’s ahead?

Right now the market shows no signs of slowing down, but it will face a new test at the end of July. Thanks to the CARES Act, roughly 30 million Americans are receiving an extra $600 in weekly unemployment benefits. That extra benefit is set to expire July 31, unless lawmakers pass an extension or new legislation to supplement income for folks who are out of work. 

The expiration of these enhanced unemployment benefits could adversely affect personal spending, a crucial component of the economy that makes up 68% of GDP. A pullback in consumer spending could hit industries outside of travel, service and hospitality which so far haven’t been as impacted during the pandemic. That’s notable because so far, highly-paid employees have been largely insulated from the recession and the high unemployment rate in service jobs has had a limited impact on housing demand. If job losses creep into new industries, all bets are off. 

Why California’s housing market isn’t tanking

Rents are falling in some areas, but home prices remain stubbornly high

BY MATT LEVIN, Cal Matters, JULY 6, 2020

It’s the worst economy since the Great Depression. Nearly 1 in every 6 California workers is out of a job, and those lucky enough to remain employed confront reduced hours, slimmed wages and mounting uncertainty over what the next few months will bring. The state budget is in shambles, and cities and counties are already laying off workers.

And yet California home prices aren’t dropping all that much.

Despite the economic carnage induced by the novel coronavirus pandemic, the state’s stubbornly expensive housing market appears headed for a relatively soft landing. While rents in some markets show signs of a steeper cliff, the value of a California single family home last month — $570,000 — is actually higher than what it was a year ago, according to the real estate data firm Zillow.

 Glen Bell – (510) 333-4460   jazzlines@sbcglobal.net

The post Glen’s SF East Bay Real Estate Market Update June 30, 2020 appeared first on Glen Bell.

SF East Bay Real Estate Market Update

May 31, 2020

By Glen Bell   (510) 333-4460

Everyone seems to be asking the question of how will the COVID-19 “shelter in place” mandate effect the real estate market and how will we come out of it later in the year. There’s been so much speculation with a number of different opinions coming from a number of sources. Keep in mind that this is “unchartered territory” and we won’t have definitive answers for quite some time. So much has changed. We as agents are very limited in what we can do during this period. A lot will be riding on how long it takes before we’re able to really go back to work, how long it takes for the COVID-19 fears to subside, how will the economy fair and what will the jobs situation looks like by then.

As agents, the market has paused as our lives have. Preparing a home for market has been delayed, and fewer new listings are coming on, due to the many challenges of being able to properly market them. Brokerages temporarily closed their doors with agents primarily working remotely from their homes. There are no open house showings while physical individual showings are discouraged and have come to a crawl. COVID-19 has disrupted all of our lives. The uncertainty and concern for our health and well-being for not only ourselves, but our family and friends, is foremost in all of our minds.

That being said, let’s take a look at how the market stands at the end of May. We haven’t seen dramatic changes just yet. What we have seen is a “mixed” bag. However, I say that only by looking at the numbers up until May 31st. Everyone asks me to pull out your crystal ball and tell us what’s going to happen.

For me, I’ve always been a firm believer in supply and demand concepts. For example, in real estate, the number of houses for sale always represented our supply, while the number of homes that have gone into contract, or pendings, represented our demand. What kind of a market, a buyers’ or a sellers’, is determined based on the relationship of these two numbers at any given time. During the REO days, there was a huge inventory, with few buyers, thus a buyers’ market. For most of the past 6 years, markets experienced a strong sellers’ market with very few listings and lots of buyers. For most of last year, we had moved back towards a more neutral or balanced market. When inventory “fell off the cliff” in November 2019, a month earlier than normal, it set up for a strong sellers’ market again early spring and that’s exactly what happened. Very little to look

at with lots buyers trying to take advantage of extremely low interest rates. We saw more competition and increased prices early on. Then COVID-19 hit.

What we’ve seen since COVID-19, is that if sellers did not already have their home listed for sale, many decided to delay or postpone coming onto the market until some of the uncertainty subsides. Many buyers have jumped back on the fence and are holding off. The uncertainty of their job being in jeopardy, a loss in income, health fears, or seeing a “big hit” in their stock portfolio has taken its toll.

The lack of inventory early this year had “flipped” our markets back into a sellers’ market temporarily. However, it seems to be setting up for another big change to come by as early as this summer. There’s a large number of sellers who took a wait and see attitude over COVID-19 who may come back onto the market then. This could come in waves with some wanting to see first how the market is doing before they put their home up for sale. There may even be more who took financial hits and feel that they now “must sell.” So, we’ll probably see a fairly large supply of homes come onto the market over the summer. Many buyers on the other hand have backed off and may not be in a financial position to purchase by then. So perhaps the strong demand that we’re used to seeing in the Bay Area will begin to decrease. This will probably pull us back into a more neutral or balanced market, or possibly even into a buyers’ market for the first time in years.

Here are some highlights for the 39 East Bay Cities that I track:

Sales are down slightly from last month, but 36.8% lower than last year’s numbers. Prices have been up slightly through spring but are now beginning to flatten out as we enter into the summer months. More homes seem to be “sitting,” taking longer to sell. We’re seeing more price reductions and more transactions fall out. Fewer buyers are going into contract.

The seasonal drop in inventory followed our normal pattern during the holidays. We watched the number of homes decrease by nearly 60% over November and December. Last year was somewhat unusual because we saw a late season start and early season end. Inventory at the end of December was at its’ 2^nd lowest level since I began tracking these 39 cities in 2006, with only 1163 homes for sale at the end of December. Our expectations normally are that new home listings begin to appear on the market as early as mid-January with a steady increase of inventory every month through to September, traditionally our high point.

Inventory increased slightly in April by only 4% We normally expect to see more than that in May, typically one of our strongest selling m0nths of the year. That’s still 29% lower than what we saw last year at this time. This represents a 39 day supply of homes, compared to a 48 day supply last year at the end of May. The number of pendings improved by a whopping 48.5%, a good sign signaling that we still have buyers. However, when we compare that number to last year, we’re still 17% lower. In fact, this is the lowest number that I have recorded of pendings for a May since I began tracking statistics in 2007. This is primarily due to low inventories as well as the influence of the COVID-19 and the “shelter in place” mandate during the last two months.

The pending/active ratio reversed its trend, moving towards a more normal balanced market now at 1.02. This is higher when compared to last years’ number of .88. We were at .72 last month. The pending/active ratio has been a benchmark that we’ve used as a measure of supply and demand to determine whether we’re in a buyer’s or a seller’s market. Typically, a number well above 1, (less inventory with more pendings) favors sellers. A number below 1 favors buyers.

• The month’s supply for the combined 39 city area is 39 days. Historically, a 2 to 3 months’ supply is considered normal in the San Francisco East Bay Area. As you can see from the graph above, this is normally a repetitive pattern over the past four years. Supply is less when compared to last year at this time, of 48 days.

• Our inventory for the East Bay (the 39 cities tracked) is now at 2,275 homes actively for sale. This is fewer than what we saw last year at this time, of 3,185. We’re used to seeing between 3,000 and 6,000 homes in a “normal” market in the San Francisco East Bay Area. Pending sales decreased to 2327, much lower than what we saw last year at this time of 2,81
• 

• Our Pending/Active Ratio is 1.02. Last year at this time it was .88.
• Sales over the last 3 months, on average, are 3.1% over the asking price for this area, slightly lower than what we saw last year at this time, of 3.4%.

Recent News

Bay Area home sales fall by half in May vs. last year; prices off 2.5%

By Kathleen Pender, SF Chronicle, June 16, 2020

The coronavirus pushed Bay Area home sales off a cliff in May.

The number of existing, single-family home sales that closed last month fell 51.1% compared with the same month last year and the median price dropped 2.5%, according to a report issued Tuesday by the California Association of Realtors.

Between April and May, sales fell 6.7% and the median price dropped 1.5% to $965,000, said the report, which excludes condominiums, newly built homes and homes that were not advertised on a Multiple Listing Service.

“May is going to be where you see the full brunt” of the COVID-19 crisis, said Jordan Levine, the association’s deputy chief economist. Because it generally takes 30 to 60 days for a sale to close after an offer is accepted, a lot of May sales went into contract in April, when the Bay Area was still under a strict lockdown. Since then the rules have eased a bit, the stock market has rebounded and it’s a little clearer which sectors of the economy are most affected.

Statewide, sales fell 41% year-over-year in May, following drops of 11.5% in March and 30.1% in April.

“It was the first time we saw three back-to-back months of double-digit declines,” Levine said.

Pending sales — the number of homes going into a contract — is a more forward-looking indicator than sales. They rebounded 67% between April and May statewide, and by a similar percentage in the Bay Area.

“We saw the pit for pending sales in mid-April,” Levine said. The sales rebound continued through the end of May but “the last couple weeks we have seen slower growth in pending sales.”

Normally, sales peak in the spring and tail off in the summer but this year “our summer will be more like spring and summer combined, or two springs combined,” said Brian Witchel, an agent with Corcoran Global Living in Marin.

Considering the drop in May sales, the 2.5% drop in prices year-over-year, which followed a 0.8% drop in April, seems fairly tame.

One reason prices haven’t dropped more is that there are fewer fundamental problems in the housing market than there were during the financial crisis, which was fueled by shoddy mortgage underwriting. And most of the job losses this year have been in service industries, where employees are more likely to be renters than buyers in the expensive Bay Area, Levine said.

“On the inventory side, sellers took a much bigger step back than buyers,” Levine said. So even though there are fewer buyers, they are competing for a much smaller number of homes.

Sellers who did not have to move have been reluctant to put their homes on the market during the pandemic.

In the Bay Area, open houses, for brokers and the public, are not allowed. One-on-one showings are allowed only if a virtual showing is not feasible, and then only by appointment with strict social distancing and health rules enforced. Before early May, agents could not even show a home unless the occupants had moved out. Now they generally can, but the occupants must be gone at the time of the showing. Even if their homes can be shown, many owners are reluctant to have strangers coming through.

Finally, low mortgage rates have made buyers eager to make a deal, perhaps more than sellers.

Among Bay Area counties, median prices rose the most year-over-year in Solano (8.1%) and Marin (7.1%). They fell the most in Napa (-7.2%) and San Mateo (-6.6%), according to the report.

Month to month, prices rose the most in Marin (9.9%) and Sonoma (2.6%) and dropped the most in Napa (-10.3%), Alameda (-7.3%) and San Francisco (-4.2%).

Anecdotally, agents in the Bay Area suburbs say they’ve had a surge of interest from potential buyers coming from San Francisco, as the coronavirus has made working from home at least part time a more viable option long-term. Many are looking for larger homes with space for one or two offices, a yard and — since they’re spending more time at home — a pool.

“Every year a certain amount of people move from San Francisco to Lafayette, Moraga, Orinda. It’s the natural flow, they get to their early 30s, have a child or aspirations of a child. This year we are getting this year’s people and next year’s,” Compass agent Paddy Keohe said. “San Francisco is one of the most beautiful cities but between COVID and restaurants and bars closing down, that romantic feature is gone,” he said. “Now (they’re) working from home in a two-bedroom apartment and it’s like, ‘Get me out of here.’”

Nicole Allen and her husband have been looking to move from their one-bedroom apartment in San Francisco’s Marina district to Berkeley, the Oakland hills or Rockridge.

“The biggest thing for us is how much more you can get for your money outside the city. We are looking for something with more space, a yard, flex room, something where you can raise a family and not feel completely crammed for a couple years,” she said. “With companies updating their work-from-home policies, we are more excited about the prospect of being outside of the city. We wouldn’t necessarily have to take BART every day.”

Chris Meadors, a Compass agent in Napa, said, “The only phone calls we have received in the last three months” are from people wanting to move from San Francisco to someplace like Napa County. He and his partner “have put five deals in contract with that exact buyer at a couple different price points in the last month,” he said. Second-home buyers are acting “with more urgency” than usual, he added. They want to know “How fast can I move in? I want to use the pool the July 4 weekend.”

Paul O’Neil, a Corcoran agent in Marin, started working with three clients wanting to move from San Francisco since before the coronavirus hit.

“They were on the fence for a while, all of a sudden they are active,” he said. All can work from home more than they used to. As a result, some are willing to look at homes farther from the city, for example in Fairfax rather than Mill Valley.

Tim Johnson, a Compass agent in San Francisco, said “it’s a little early” to say whether this is more than a seasonal trend, since summer is when families with children often move from the city to suburbs before schools reopen. He said families are also looking for bigger homes within San Francisco, with room for offices and home schooling.

“That tends to drive people toward larger accommodations rather than out of the city,” he said.

Paul Barbagelata of BarbCo Group in San Francisco has heard of people wanting a second home “in the Wine Country, Tahoe, or a place where … there is fresh air, some elbow room and they won’t go crazy” sheltering in place, he said. But “I have not personally experienced any fallout yet” from people moving out of the city entirely. “By September or fall we will have a better understanding if there is a flight to the suburbs or not.”

In a report earlier this month, Compass Chief Market Analyst Patrick Carlisle noted that San Francisco “was more deeply and more quickly affected by COVID-19 and shelter-in-place” than other local markets. It saw larger initial drops in activity. “Even with the remarkable rebound of buyer demand in May, its recovery is, so far, lagging other counties on a year-over-year basis.”

In a chart, he plotted the number of homes going into contract last month compared with May 2019. Among Bay Area counties, the highest was Sonoma at 100%, which means Sonoma’s activity was about the same as last year. The next highest were Solano (98%) and Marin (88%). The lowest were San Francisco (62%) and Alameda (68%).

But, he added, “one cannot come to conclusions in the middle of a crisis. In 1989, right after the earthquake, there was talk about turning the entire Marina district into a park. After 9/11, it was said in New York City that no one would want to live in condo penthouses anymore.”

Homebuying Demand Just Keeps Getting Stronger

By Glenn Kelman, Redfin, June 12, 2020

Key Takeaways

• Demand is 25% above pre-pandemic levels. Buyers haven’t “batted an eyelash” over the possibility of a resurgent pandemic or now protests.
• Bidding wars are “bananas” with homes “flying off the shelves.” Sale prices are up 3.1%; asking prices are up 9.9%.
• New listings are still 15% below last year’s levels. More listings may hit the market soon, though sellers still have more health concerns than buyers. A buyer can decide how many homes to visit, but a seller has to “let an open-ended number of people walk through until the home is sold.”
• Many renters in the city are buying in more affordable outlying areas; home-ownership levels may meaningfully increase for the first time in 15 years.
• But continued unemployment could pull first-time buyers out of the market; “Condos are tough to sell right now… The ball is going to drop and it will be interesting to see how it rolls down the hill.”

Nothing Seems to Deter Homebuyers

It seems that nothing can deter homebuyers. Seasonally adjusted demand for the week of June 1 – June 7 is now 25% higher than it was pre-pandemic in January and February, marking the eighth straight week of rising demand.

Our abiding concern in May was about the number of homes for sale, but that’s improving too. After falling to 21% below last year’s level the week of May 25 – 31, new listings last week continued their recovery; last week’s new listings were 15% below last year’s level.

Listings accepting an offer improved as well. Two weeks ago, this number was down 11% year-over-year, but for the week of June 1 – June 7 it was 9%. With demand surging and supply recovering, we expect sales to strengthen; mortgage purchase applications were up 7% year-over-year in the last week of May and up even more, 13%, in the first week of June.

Buyers Unfazed by Protests and Pandemics

Agents from Seattle to LA to Philadelphia have been surprised that protests didn’t deter more buyers. “It has been a speed bump,” said Alec Traub, an LA-based team manager for Redfin. Hazel Shakur, Redfin Maryland agent, reports that “between the virus and now the protests, folks are not batting an eyelash.” What’s driving demand is low rates and, now, easing credit. According to Sarah Martin, a Redfin mortgage advisor in Washington DC, “credit has pretty much loosened up except for self-employed borrowers.”

Sellers Re-Entering Market, Worried About Health Risks

And sellers, always more careful than buyers, are finally responding to increased demand. “A lot of what I’m listing are not new clients, but people I’ve met with over the past few weeks and months,” said Seattle Redfin Agent David Palmer. “I’ll be bringing on double-digit listings in the month of June and expect the same for July. Those people who were looking to get top dollar and wanted to wait to list until they could get the most buyer attention, they can definitely get that now.”

It’s also easier for buyers than sellers to accept the health risks of touring. “We’ve had a lot of clients who are going to list with us but they’re just not ready yet,” said Mr. Traub, the LA team manager. “Especially when you live in your house, it’s more difficult to let an open-ended number of people walk through until the home is sold. When you’re a buyer, you can control the number of listings you see in-person. I think a lot of people still don’t feel comfortable with that and what that means for their own health.” Adds Charles Davies, a Redfin agent in Philly, “If it’s vacant, I can get those listings all day long.”

Bidding Wars Common

Until supply catches up to demand, prices will rise. For the week of June 1 – 7, year-over-year growth in asking prices was up 9.9%, compared to 7.9% the week before, and 3.9% in January and February. Sales prices for the first week of June are up 3.1% year-over-year, an improvement from 1.3% in May, when offers from late March and April were still closing. The percentage of newly listed homes accepting an offer within 14 days of their debut increased from 42% in May to 47% in the first week of June.

The major theme of our conversations with agents across the country this past week has been about bidding wars. “It’s just bananas, with so few listings and so many buyers,” said Ms. Shakur, the Redfin agent in Maryland. “Having lived through the 2008 bubble, I just want to be cautious. Maybe it’s nowhere near the same size as it was in ’08, and maybe it’ll turn out not to have been a bubble at all. But buyers are desperate. If a property is in a desirable neighborhood, buyers will overpay. Bidding wars, escalations, no inspections, agreement to pay over appraised value, all of that’s becoming the norm.” Adds Mr. Palmer, the Redfin agent in Seattle. “Anything I’m pricing correctly right now is flying off the shelf.”

No one knows for sure how long this will keep up, but very tight credit in recent months has at least limited housing speculation; price increases have been the result of record-low mortgage rates and inventory. “One thing I’ve noticed on my listings are our seller dashboards,” Mr. Palmer said. The seller dashboard shows Redfin listing clients and their agents how much online traffic a listing is getting, and how digital ad campaigns for that listing are performing. “The views are up definitely for what I would normally see for a week’s worth of views compared to this time last year. Usually 1,000 – 1,500 views would be a solid week for your first week. I’m having listings hit that on the first day.”

Buyers Prefer Three-Dimensional Scans to Video-Chat Tours

Online interest in listings now takes many forms. As shelter-in-place rules subside in parts of the country, much of the demand for virtual showings is from relocating homebuyers who want to avoid a long drive or a flight to tour a home. Fifteen percent of tours are happening via video-chat rather than in person. This is half of its April peak, but still 30 times higher than it was pre-pandemic.

The popularity of three-dimensional scans has been even more durable, with views of these scans on Redfin.com increasing 42% from April to May. In markets like Orange County and Seattle, a quarter of new listings include a scan, and we now believe this will be the most popular way to virtualize a showing, with buyers preferring to move through the home at their own pace, whenever they want.

People Are On the Move

Many of these relocating buyers are pursuing the suburbs, or smaller, more affordable cities. “It’s odd, because I’ve got two different sellers moving to Oklahoma, both for jobs,” said Ms. Shakur, the Redfin agent from Maryland. “That big migration we’re all expecting, it’s beginning to happen. People are now moving more to the interior of the country. I also have a lot of clients who are retiring and moving down south to more tax-favorable states.”

“I think some sellers are now at the point where they don’t want to be in the city anymore or keep paying high prices to stay here,” said Mr. Traub, one of Redfin’s LA team managers. “A lot of people relocate to LA for work, but now they realize they could go back home and their money would go further, especially when they can work remotely.”

It has been a point of debate within Redfin whether the movements of people we’re now seeing are mostly to the outlying areas of the same city, or to entirely different parts of the country. What we can be sure of now is that this latter group of cross-country movers is already increasing in size, albeit only modestly: in April and May of 2020, 27% of Redfin.com users searched outside their metropolitan area, compared to 25% in April and May of 2019.

We now speculate that the flexibility to work remotely, combined with low interest rates, will lead to higher levels of home ownership in the U.S., which have mostly been declining since 2004. “With interest rates so low, a lot of people want to buy who are currently renting in the city,” said Redfin Boston Agent Elynn Chen. “They want to go somewhere for more space.”

Long-Term, Still Clouds on the Horizon

But even though demand is strong now, no one can say for sure what the long-term outlook is. The whole reason we’re reporting on demand every week instead of every month is because we have seen such a volatile real estate market. “A lot of jobs are not coming back,” said Mr. Palmer, the Redfin Seattle agent. “Would-be first-time buyers are gonna say screw it. They are just thinking about how to pay rent and survive. We have a lot of band-aids with unemployment insurance right now, but those aren’t going to last forever. Condos are tough [to sell] right now. The ball is going to drop and it will be interesting to see how it rolls down the hill.”

Despite COVID-19 Crisis, More Than Half of Homebuyers More Likely to Purchase a Home Soon

By Crissinda Ponder, Lendingtree, 6/10/2020

The coronavirus pandemic — coupled with historically low mortgage rates — is motivating a majority of homebuyers to purchase a home in the coming year, according to results from LendingTree’s latest survey.

To get a better handle on how the outbreak is impacting homebuyer behavior, LendingTree commissioned a survey of more than 1,000 prospective buyers about their plans to jump into the housing market — or not.

Key findings

53% of homebuyers are more likely to buy a home in the next year, due to the coronavirus outbreak.

This is especially true for first-time homebuyers (73%) and millennials (66%). For all buyers who are planning to purchase in the next 12 months, their top two motivations are:

• Taking advantage of record-low mortgage rates (67%).
• Being able to save a larger down payment because of reduced spending (32%).

Nearly two-thirds (65%) say the coronavirus pandemic has impacted how much money they plan to spend on a new home.

Among this group of prospective homebuyers, 44% plan to buy a less expensive home and the remaining 21% want a more expensive home. Among the latter group, 28% of first-time buyers say they’ll buy a pricier home, while just 17% of repeat buyers agree.

About 6 in 10 (61%) homebuyers have toured a house virtually over the last two months.

Another 33% of respondents said that although they haven’t yet participated in a virtual tour, they plan to do so. Additionally, 3 in 10 buyers say they’d buy a home without physically touring it in person.

Buyer concerns about qualifying for a mortgage

More than 4 in 10 (44%) homebuyers are more worried about qualifying for a mortgage because of the pandemic. First-time buyers (58%) and millennials (52%) are especially anxious.

There’s some cause for concern. Lenders are becoming less flexible with their minimum mortgage requirements. Access to mortgage credit fell by 12.2% in April, according to the Mortgage Credit Availability Index from the Mortgage Bankers Association.

Less credit access means lenders are likely to raise their minimum credit score and down payment requirements. They may also request additional documents during the mortgage underwriting process.

Other takeaways

Of the 1 in 5 homeowners across all ages who are less likely to buy a home because of the coronavirus outbreak, the most-cited reason was economic uncertainty (70%), followed by the inability to tour homes in person (42%) and loss of income (38%).

More than half (53%) of first-time buyers said they’d buy a house without an in-person tour; just 18% of repeat buyers would do the same. The percentages of buyers in each age group who would purchase a home based solely on a virtual tour are:

• 42% of millennials
• 31% of Gen Xers
• 10% of baby boomers

Additionally, 43% of men would skip an in-person tour before a home purchase. Only 16% of women agree.

Bay Area’s dropping rents will reshape housing market

By J.K. Dineen, SF Chronicle, June 9, 2020

The coronavirus pandemic is driving rents down in San Francisco and across the region, reshaping a housing market that for the past decade has generated enormous profits for residential developers while displacing tens of thousands of workers from the inner Bay Area.

Rents are down 9% from a year ago in San Francisco and over 15% in some tech hubs in the South Bay, according to a recent report by Zumper, a rental housing search engine. That trend will likely accelerate as layoffs mount and workers, newly liberated by work-from-home options, flee the Bay Area for cheaper cities, according to housing experts.

While it’s too early to say whether the current health crisis will be a short-term dip or a longer-term correction in the cost of housing, it’s clear that in the next few months, renters looking for housing in the Bay Area will get a lot more for their money than they did a year or two ago. Owners are increasingly scrambling to get tenants to sign leases, offering months of free rent, signing bonuses and other discounts. New market-rate housing development is likely to stop, as builders wait to see how far rents tumble.

“The balance of power has shifted to the tenants — there is no question about it,” said Joe Tobener, an attorney who represents tenants.

Many landlords are proactively cutting rent — usually by 10% or 15% — as an incentive for tenants to stay, Tobener said. Other tenants are taking the matter into their own hands — reaching out to see if their current landlord will give them a better deal.

That was the case for Zenab Keita, who lives in the Landing, a 282-unit apartment complex in Oakland’s Jack London Square. Keita signed her lease in June 2019 for $2,600 a month. While she has managed to hold onto her job managing corporate partnerships in sports and entertainment, 66% of her compensation is contingent on deals, and those have vanished during the pandemic.

With her lease set to expire in June, Keita approached her landlord, Essex Property Trust, to see if she could get $400 or $500 taken off her monthly rent.

“They came back and offered $67 off,” she said. “I was like ‘You should not have even written that email. That was a waste of everybody’s time.’”

Meanwhile, as she started looking around for new places, she saw that her landlord was giving away eight free weeks of rent and a $1,000 signing bonus to folks willing to sign a year lease in her building. When she asked if she could get a similar deal, she was turned down. It wasn’t until she told them she would be moving out that they offered her eight free weeks in addition to the $67 reduction, which averaged over a year means that she will be paying $2,111 a month.

She signed the lease. “It was a big lesson that closed mouths don’t get fed,” she said.

Essex Property Trust did not respond to a request for comment.

While Oakland saw so much rent appreciation in the first half of 2020 that it is still up 4.7% from June 2019, that will likely not last. Oakland, which has been furiously producing housing over the last two years, has about 10,000 units either under construction or recently completed. This includes 2,600 units being built around the Broadway-Valdez neighborhood.

John Pawlowski, a senior analyst covering the apartment market for Green Street Advisors, said that Oakland housing — most of it targeting high-wage earners — could take a long time to fill up with renters. And competition will be fierce with continued free rent incentives. He said demand for new condos will be “very, very thin as the impact of job losses spreads across industries.”

Experts: Spring’s Missing Home Sales Will be Added to Coming Years

By Skylar Olsen, Zillow, June 3, 2020

• In a survey of 106 economists and real estate experts conducted by Pulsenomics and Zillow, 41% of panelists expect the U.S. recovery will follow a ‘U’ shape, with the recession lasting several quarters before returning to growth.
• Once the pandemic begins to subside, experts agree, there will be an increase in demand for suburban and rural living.
• On average, panelists expect home values to decrease 0.3% in 2020, a sharp decline from expected growth of 3.3% when surveyed three months before.

When coronavirus turned the economy upside down, anxiety and uncertainty about the future initially kept many homebuyers and sellers at bay. Inventory and sales have picked up over the past month, though, and a panel of housing experts and economists say the U.S. housing market hasn’t lost those missing springtime transactions for good.

The Zillow Home Price Expectations Survey, sponsored by Zillow and conducted quarterly by Pulsenomics LLC, asks more than 100 economists, investment strategists and real estate experts for their predictions about the U.S. housing market. The Q2 survey focused on the impact of coronavirus on the market and expected recovery patterns, and also asked for predictions on how the pandemic will shape home-buying decisions in the future.

Coronavirus and subsequent stay-at-home orders resulted in lower-than-expected transaction volume during what was primed to be a busy spring home shopping season. While it was thought the spring buying season could shift to the fall, the pandemic effects are poised to continue into summer and only 10% of the survey panelists said they believe those transactions will materialize later in 2020. More than twice as many experts (22%) said they expect a “double up” during next spring’s shopping season, and the vast majority predicted that recovery will be spread out over the next several years.

This prediction is in line with how the experts expect the U.S. economy to recover overall. Forty-one percent said they think economic recovery will follow a ‘U’ shape, and 33% say it will be a bumpy, multi-year return back to trend growth. Both patterns are characterized first by a sharp decline and then match how experts see transaction volume recovering, with the consensus generally being a more gradual journey back to normal.

Prices nationally are now projected to fall 0.3 percent this year according to the panel-wide average forecast — down from an expected increase of 3.3 percent just three months ago.

“This is the first time since 2012 that the panel-wide price outlook has turned negative, and the quarter-to-quarter swing in expectations is the largest we’ve seen in more than a decade,” said Terry Loebs, founder of Pulsenomics. “Longer term, the outlook for home values nationwide is mixed — price projections for 2022 and beyond actually inched higher from levels recorded prior to the Covid-19 outbreak. However, nearly seven in ten experts now indicate that their five-year forecast has downside risk. Last quarter, fewer than four in ten panelists foresaw downside — of course, that was before the Covid-19 crisis, its economic devastation and unprecedented government response.”

Zillow’s own forecast calls for a 1.8% drop in home prices by October 2020, expecting home prices to return to Q4 2019 levels by the Q3 2021. While predictions on home prices continue to steepen, the outlook on pending home sales continues to become more optimistic, and Zillow now shows sales hit bottom in April with a 44% drop, and are on their way back up, compared to the original forecast of a 60% dip.

Experts’ forecasts on the future of housing vary widely at this early stage of the recovery. Zillow’s own forecast has become more optimistic as we ingest new data and watch pending sales pick up faster than expected. What does seem more consistent in this wisdom of crowds is that full recovery is a couple years away — much faster than in the last housing downturn — and remote work will eventually work its changes on the housing market.

Experts also said that where people choose to live will look a little different once the pandemic subsides. Panelists predict future homebuyers will show more interest in suburban and rural areas, at the expense of urban density. Previous Zillow research has indicated that a future that sees more people working from home could make the suburbs more appealing, and the panelists echoed the likelihood of this demand. Although panelists believe there will be a shift in location preference after coronavirus, they also say buyers will want larger homes equipped with home offices moving forward. Stay-at-home orders quickly emphasized the need for more space while stuck at home, and panelists think more space will be a determining feature for future home-buyers.

Even with lower sales volumes compared to 2019, the U.S. housing market has shown resilience during the pandemic and has already begun to rebound. Pending sales are up 40.8% in the past month, and new home sales in April were up 0.6% from March.

Glen Bell – (510) 333-4460   jazzlines@sbcglobal.net

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